#1LUSHOƆCML ¿563N BANK OF GEORGIA GROWTH AT THE RIGHT PRICE LSE: BGEO/GSE:GEB JSC Bank of Georgia investor presentation November 2010 Merrill Lynch Russia & CIS 1-1 Conference New York, November 2010#2Introduction to Bank of Georgia The leading universal bank in Georgia No.1 by assets (34%), (¹) gross loans (34%), (¹) client deposits (30%) (¹) and equity (39%) (¹). September 2010 YTD market share gain 2.2% Assets of GEL 3.6 bn (USD 2.0 bn), Net Loans of GEL 2.1 bn (USD 1.1 bn), Client Deposits of GEL 1.7 bn (USD 0.9) and Equity of GEL 679.6 million (USD 376.2 bn) BoG Market Share by Assets 40% 35.4% 34.2% 32.9% 33.0% 27.9% 30% 17.2% 19.0% 17.8% 20% 10% 0% 2003 2004 2005 2006 2007 2008 2009 Q3 2010 Leading retail banking, with top brand, best distribution network and broadest range of services of any bank in Georgia. Number of Retail Clients 729,500, Number of Branches 137, ATMs 388 Leading corporate bank with approximately 90,500+ legal entities and over 171,000+ current accounts Leading wealth management, insurance, brokerage, leasing and card-processing services provider Banking operations in Ukraine (BG Bank) and Belarus (BNB) account for less than 10% of BoG's consolidated total assets The only Georgian entity with credit ratings from all three global rating agencies S&P: 'B/B; Fitch Ratings: ‘B+/B' - at the sovereign ceiling; Moody's: 'B3/NP (FC)' & 'Ba3/NP (LC)' Listed on the London Stock Exchange (GDRs) and Georgian Stock Exchange Market Cap (LSE) US$ 546 mln as 10 November 2010 Approximately 95% free float Issue of the first ever Eurobonds in Georgia Bloomberg: BKGEO; 5 year, 9%, US$200 mln (US$ 50 mln bought back) B/Ba2/B (composite B+) (1) All data according to the NBG as of 30 September 2010 Ownership Structure Institutional Shareholders* 93.0% Local Shares Held by Domestic and Foreign Retail Shareholders 3.9% Management and Employees** 3.1% *through BNY Nominees Limited **includes GDRs held as part of EECP LOLO BANK OF GEORGIA www.bog.ge/ir November 2010 Page 2#3Lobko BANK OF GEORGIA www.bog.ge/ir Georgia Group structure Bank of Georgia Group Commercial Banking JSC "Bank of Georgia" BG BG Aldagi BNB Bank Capital BCI Corporate Banking Retail Banking Wealth Management Israel UK Ukraine Belarus Georgia Ukraine Belarus November 2010 Page 3 Georgia Securities Insurance#4LUSHOƆCML ¿563N BANK OF GEORGIA The Georgian Economy November 2010#5Georgia's Economy – Basic Facts Area: 69,700 sq km - Population: 4.4 million (as of January 1, 2009) Life expectancy: 76.5 years Official language: Georgian Literacy: 100% Capital: Tbilisi Currency (code): Lari (GEL) GDP 2010F: US$11.5 billion GDP real growth rate 2009A: -3.9% GDP real growth rate 2010F: 6.0% GDP per capita 2010F (Nominal): US$ 2,610 GDP per capita 2010F (PPP): US$ 4,971 Budget Deficit 2010F: 6.3 % of GDP Inflation rate 2010F: 6.0% External public debt / GDP 2010F: 36.0% Sovereign ratings: Fitch B+/Stable S&P B+/Stable/B+ Moody's Ba3/Stable Source: Government of Georgia/IMF/Bank of Georgia estimates Lobko BANK OF GEORGIA www.bog.ge/ir CANADA ARCTIC OCEAN 60% RUSSA 454 ATLANTIC OCEAN EUROPE CHINA GEORGIA ALGERIA FLAM DELANUS War UKRAINE ROMANA My IRAT INDIA GEORGIA TORNEY IDIAN OCEAN November 2010 Page 5#6Strong economic growth before crisis ... starting again? Gross Domestic Product USD billion 14 15% 12.8 12.3% 12 11.1% 11.5 13% 10.7 9.6% 10.2 9.4% 11% 10 9% 8 7.8 5.9% 6.4 6 5.1 4.0 4 6.0% 7% 5% 2.3% 3% 1% 2 -1% 0 -3% -3.9% -2 -5% 2003A GDP per capita 2004A 2005A 2006A Nominal GDP (LHS) 2007A Real GDP Growth (RHS) 2008A 2009A 2010F USD 6,000 5,000 4,038 4,000 3,644 3,242 2,966 3,000 2,000 1,764 1,484 1,188 919 1,000 0 2003 Source: National Statistics Office of Georgia Lak BANK OF GEORGIA www.bog.ge/ir 2,315 4,664 4,971 4,863 4,747 2,921 2,610 2,450 2004 2005 2006 Nominal GDP per capita 2007 GDP per capita PPP 2008 2009 2010F November 2010 Page 6#7GDP per capita is low, leaving much room to climb GDP per capita across countries US$ 35,000 30,000 25,000 20,000 18,256 14,402 15,000 12,914 11,302 10,000 8,681 8,711 7,523 5,166 5,000 3,735 2,569 2,610 31,778 Ukraine 2009 Georgia 2010F China 2009 Belarus 2009 Romania 2009 Russia 2009 Turkey2009 Poland 2009 Hungary 2009 Estonia 2009 US$ Czech Republic 2009 EU Average 2009 4,500 4,000- 3,500- 2,984 3,012 3,000- 2,555 2,610 2,641 2,737 2,500 2,000- 1,500- 1,000- 500 0+ Bulgaria 2003 Georgia 2010F Turkey 2002 Romania 2003 Russia 2003 Serbia 2004 Source: IMF, National Bank of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir November 2010 Page 7#8Key drivers of economic growth Regional Hub Financial Services Libertarian Economy Export Growth FDIS Increased importance of Georgia as regional transportation and logistics hub with geopolitically important location for cross country trade and energy transit. Export CAGR of 17% from 2003 to 2009; 33% y-o-y increase in nine months 2010. Net electricity exporter since 2007. FDI averaging at 16% of GDP during past three years, with cumulative FDI (2004-2009) in country reaching 60.5% of GDP as of YE 2009. Rapidly developing Financial sector with demonstrated resilience to crises (conservative regulation; No government bailouts) with high capital base to support the growth. Lobko BANK OF GEORGIA www.bog.ge/ir November 2010 Page 8#9• Libertarian economic policies kick-start modernization Tax and Tax rates slashed: Only six taxes, down from 21 Flat personal income tax of 20% (15% by 2013) Corporate income tax 15% By 2012 no taxes on dividends, interest income or worldwide income "Liberty Act" Referendum is required for an increase in tax rates Budget expenditure capped at 30% of GDP (effective FY2012) ☑Budget deficit capped at 3%, effective FY2012 Public debt capped at 60% of GDP, effective FY2012 Corruption and Red tape slashed According to IDA (International Development Association of World Bank) Georgia ranks as a top business reformer Corruption significantly reduced, Transparency International ranked Georgia 7th out of 69 by Global Corruption Barometer 98% of Georgians didn't have to pay bribe in past year, according to International Republican Institute Georgia 11th out of 183 in the WB's Ease of Doing Business (up from 112 in 2005) Customs code harmonized with EU; Capital controls abolished since 1990s Bribe payers index (% are not paying bribes) United States Turkey Georgia United Kingdom Poland Belarus Romania Armenia Azerbaijan Ease of doing business Ukraine Russia Turkey Poland FSU Average EE Average Belarus Romania Armenia Azerbaijan 43 54% 57% 142 120 73 72 71 67 58 55 87% 86% 98% 98% 98% 97% 96% 38 Israel 29 Switzerland 21 Georgia 11 UK 5 Source: Transparency International, the Heritage Foundation, World Bank United States 4 LOLE BANK OF GEORGIA www.bog.ge/ir November 2010 Page 9#10Regional hub Baku Tbilisi Ceyhan (BTC) oil export pipeline - operated by BP from Caspian Sea to Europe via the Turkish coast. 1.0 million bbl/day or circa 1.2% of the current World oil consumption (9% of the consumption by EU, 80% of aggregate consumption by Turkey, Romania, Bulgaria and Poland) is transported through BTC or railway; c. $4bln invested by BP Consortium; Shah-Deniz (BTE) gas pipeline (South Caucasus pipeline) - 6.6 bcm/year operated by BP to transport gas from Caspian Sea to Turkey; Iran-Azerbaijan-Georgia (IAG) gas pipeline - 3.5 bcm/year Western Route Pipeline (Baku Supsa) oil export pipeline 5.75 mt/year operated by BP from Caspian Sea to European Markets through the Black Sea; Russia-Georgia-Armenia gas pipeline - 5.8 bcm/year - Free industrial zones created around Tbilisi, Poti (port), Kutaisi (second largest city). Tax rates in FIZ are largely 0% Two sea ports. Poti Sea Port privatized in December 2008 by Rakeen Group (UAE) to build infrastructure for operating Free Industrial Zone Transportation Communication and Trade cumulative CAGR 2004-2009 of 9.4% Upcoming Projects NABUCCO Project is to finish by 2015, and White Stream project is flagged as "Priority Project" by EC Baku-Akhalkalaki-Kars railway line railway to link Asia and Europe LNG sanctioned in 2007 building Azerbaijan-Georgia-Romania-Hungary Black Sea liquefied natural gas export route will supply c.6- to 8-billion cubic meters of liquefied Azerbaijani natural gas per year to Europe via Black Sea tankers White Stream (proposed Nabucco gas pipeline to Central Europe (planned) Russia Georgia Supsa Baku-Supsa oil pipeline Caspian Sea Armenia Baku-Tbilisi-Ceyhan oil pipeline Erzurum Baku-Tbilisi-Erzurum gas pipeline Turkey Cehyan Iraq Syria GDP Breakdown Health, social and community work, 10.1% Education, 3.9% Public administration, 13.3% Real estate, renting and business activities, 6.9% Hotels and restaurants, 1.8% Financial intermediation, 2.6% Kazakhstan Trans-Casplan gas pipeline (proposed) Azerbaijan Sangachal Türkmenbasy Terminal Iran Agriculture, hunting and forestry; fishing, 7.5% Turkmenistan Trade (Retail & Wholesale), 11.7% Transport & Communication, 10.8% Mining and quarrying, Manufacturing, 7.79,8% Utilities & household Construction, 5.6% processing, 4.6% Lobko BANK OF GEORGIA www.bog.ge/ir 22.5% November 2010 Page 10#11Export growth WTO member since 2000. No quantitative restrictions on trade; As of November 2007 Georgia has entered into a FTA with Turkey One of the two beneficiaries of the EU GSP+ Scheme in the CIS since 2006, which grants local companies the right to export 7,200 categories of goods duty-free into the EU. US- Georgia charter on Strategic Partnership envisions an update of Bilateral Investment Treaty, expansion of Georgian access to the GSP and the possibility of entry into Free Trade Agreement Export growth of 33% y-o-y nine months 2010 driven by exports of main export items: agricultural products, ferroalloy, precious metals, aircraft, rail car, vessels, fertilizers and machinery Significant investments made in export oriented companies. Import of capital goods amounted to c.13% of GDP from 2004 to 2009 Rapidly growing tourism sector. C.US$1.4B of donor money earmarked for investments in infrastructure. 2010 a record year in number of tourists visiting Georgia Huge untapped hydro-power resources. Only 18% of Georgia's hydro potential of 50 GWh is being utilized; 1,200 MW transmission line to Turkey will become operational in 2013 which will significantly boost export potential to Turkey Source: National Statistics Office of Georgia, Ministry of Energy of Georgia Labo BANK OF GEORGIA www.bog.ge/ir Electricity Export/Import mln kWh 2,000 1,500 1,000 1,279 500 236 749 634 679 494 1.327 200 71 122 96 30 (255) (434) (649) (48) (777) (500) (1,080) (1,288) (1,399) (681) (1,000) (844) (1,217) (1,277) 2003 2004 2005 2006 2007 2008 2009 Sep-10 Export Import Net export (1,500) Number of tourists '000 2,500 2,000 1,500 1,000 560 500 368 313 2003 2004 2005 Europe excluding Turkey 1,500 1,290 1,052 983 1,950 2006 2007 CIS 2008 Turkey 2009 2010F Other November 2010 Page 11#12Trade structure Exports and Imports* 8,000 Imports of goods & services CAGR ('04-'09): 16% Exports of goods & services CAGR ('04-09): 14% 7,499 Income and Transfers US$ mln 7,000 6,000 5,000 4,413 Current 4,000 3,318 account Deficit 6,215 5,917 5,267 1,178 900 725 849 3,000 2,493 686 amounted 1,865 421 2,000 492 9.8% of GDP 193 1,000 2,552 3,182 in 1H 2010 2,187 3,688 3,199 3,940 1,289 1,647 0 FGEL 2003 2004 2005 2006 2007 2008 2009 2010F appreciated by 4.6% since Source: Central Bank of Georgia June 2010 *Export and Import of goods and services Current Account Deficit US$ mln Donor inflows (DI) Total private capital inflows (TPCI) CAD CAD as % of GDP CAD+TPCI+DI as % of GDP 5,000 20.0% 14.7% 4,000 15.0% 7.7% 8.6% 7.9% 3,000 5.6% 10.0% 3.2% 5.5% 1.6% 2,982.4 2,000 1,698.4 5.0% 734.8 1,000 479.6 0 351.0 98.3 (383:3) -6.9% 1782) (709.2) -1,000 (383.8) 1,508.1 261.7 (1,175.3) 2,291.8 276.2 (2,010.0) 1,423.4 0.0% 942.0 1,092.6 658.0 -5.0% (1,216.5) (2,912.3) (1,096.8) -10.0% -9.6% -11.1% -11.3% -2,000 -9.5% -15.0% -15.1% -3,000 -20.0% -19.8% -4,000 -22.8% -25.0% 2009 2010F 2003 2004 2005 2006 2007 2008 Donor Inflows include both public and private sectors. Donor inflows in 2009 adjusted according to the banking sector foreign debt outflows Source: Central Bank of Georgia, Ministry of Finance of Georgia, BoG Forecasts for 2010 Lak BANK OF GEORGIA www.bog.ge/ir November 2010 Page 12#13FDIS and Donor assistance Liberal regulatory environment for foreign businesses, resulting in FDI averaging at 16% of GDP during past three years, with cumulative FDI (2004 -2009) in country reaching 60.5% of GDP as of YE 2009. Unequivocal support from the West and IFIs with total financial pledge through 2011 of US$4.5 bln (42% of 2009 GDP). Approximately one third of the package is earmarked for financial sector. By end of FY 2010, cumulative donor commitment to Georgia under the Brussels pledge will total circa US$4.2 billion, with possibility of further upward adjustment. As of YE 2009, US$ 1.4 billion was disbursed In addition: Approved access to US$1.2 bln under SBA by IMF until 2011 U.S. Committed US$ 124 mln investment in energy infrastructure development (February 2010) US$70 million from ADB for infrastructure repairs Net remittances US$ mln 1000 FX reserves 2,500 2,000 1,500 1,000 0.8 Fxreserves 0.8 0.8 1.1 1.0 1.3 FX/M2 1.8 1.7 18 1.5 1.6 US$ 2.11 bn US$0.93 bn US$1.48 bn US$0.49 bn US$ 1.36 bn 500 US$0.38 bn US$0.19 bn 1.4 1.2 US$ 2,20 bn 1.0 10 0.8 0.6 0.4 0.2 0.0 00 2003 2004 2005 2006 2007 2008 2009 Sep-10 FDI Inflows 9% 8.4% US$ mln 3,000 25.0% 900 800 700 5.4% 600 4.9% 4.2% 500 400 300 200 420.5 315.4 100 212.7 0 2004A 2005A 2006A Net remittances (LHS) Source: National Statistics Office of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir 7.4% 7.2% 7.2% 8% 2,500 7% 6% 2,000 19.8% 20.0% 942.0 276.2 15.3% 15.0% 917.9 755.4 766.5 5% 1.500 950.0 4% 261.7 12.2% 1,092.6 10.0% 658.0 3% 1,000 7.0% 2,015.0 9.4% 1,564.0 7.7% 2% 160.3 500 176.7 1,190.0 6.1% 5.0% 870 1% 658.0 483.0 450.0 0% 0 0.0% 2007A 2008 A 2009 2010F 2004 2005 2006 2007 2008 2009 2010F -Net remittances as % of GDP (RHS) Net FDI Donor inflows Net FDI as % of GDP Source: Government of Georgia presentation November 2010 Page 13#14Bank debt to GDP 200 Financial intermediation Prudent Regulation Ensuring Financial Stability High Regulatory Capital Requirement: Top 5 Banks average Tier I capital adequacy ratio (NBG standards) – 14.2%, Bank of Georgia 15.2% (BOG standalone BIS Tier I Capital adequacy ratio 24.7%) - High level of liquidity requirements from NBG at 30% of Liabilities, Bank of Georgia 33.8% 180 160 140 120 100 2880 60 400 40 20 20 22.3 24.3 28.9 33.1 41.5 45.7 47.0 47.3 49.5 67.9 114.6 90.4 76.0 76.9 186.0 Resilient Banking Sector Demonstrated strong resilience towards both domestic and external shocks without single bank going bankrupt No nationalization of the banks has occurred, no government bail-out plans have been required, no Government ownership since 1995 **Excess liquidity and excess capital that has been accumulated by the banking sector to enable boosting the financing of the economic growth Very low leverage of population with Retail Loans below 10% of GDP and Total Loans at c. 30% of GDP resulted in contained number of defaults during the global crisis (Average LLP by BoG standalone as of end Q3 '10 at c. 6.5%) Russia Bulgaria Romania Turkey Georgia Azerbaijan Armenia Banking sector assets GEL mln 12,000 10,000 8,000 6,000 4,000 Poland Belarus CAGR 33% Kuwait Ukraine Bahrain UAE USA* EU* 9,846 8,865 8,293 2,271 7,208 1,550 2,069 1,430 4,227 5,202 5,455 749 4,524 4,425 2,548 1,697 287 2,000 2.585 1,336 275 1,645 900 389 522 616 893 1,353 1,860 1,699 2,372 2003 2004 2005 2006 2007 2008 2009 2010 YTD *Includes only loans to households Labkon BANK OF GEORGIA www.bog.ge/ir Cash Net Loans Other Assets November 2010 Page 14#15LUSHOƆCML ¿563N BANK OF GEORGIA Management target for 2010 November 2010#16Targeted financial performance 2010* Target pre-provision profit for 2010 GEL mln 160 127.9 135.6 5.73 135.0 13.03 120 106.8 21.85 80 60 40 40 68.02 Assumptions 2010 real GDP growth of 2%* in Georgia 2010 inflation rate of 3.2%* in Georgia The GEL/US$ exchange rate remains stable during 2010 ☑Geo-political stability is sustained in the region 0 2007 Profit before provisions Losses related to Real Estate Other 2008 27.0 2009 2010F Goodwill Impairment associated with BG Bank Losses related to investments Target net provision expense for 2010 GEL m In 160.0 120.0 80.0 40.0 17.0 0.0 2007 * As announced in November 2009 Labkon BANK OF GEORGIA www.bog.ge/ir 133.1 128.7 Target net income for 2010 GEL mln 100.0 75.6 80.0 60.0 40.0 20.0 0.2 10% upside risk 72.3 2007 2008 2009 2010F 50.0 (20.0) (40.0) (60.0) (80.0) 2008 2009 2010F (100.0) *IMF Estimates (98.9) November 2010 Page 16#17LUSHOƆCML ¿563N BANK OF GEORGIA Strategy November 2010#18Strategic objectives: grow at the right price More efficient Deposit funding Lending machine Focus on International operations Enhance operational efficiency through technological improvements: Temenos T24, core banking software, acquired in October ‘09 is in the process of implementation; Deployment of Softscape, talent management solution, and CRIF, credit scoring solution, is under way Wealth Management services launched in Israel, Ukraine and London Deposits from international clients reach GEL 135 mln, c. 8% of total deposits in Q3 2010 Premier Banking launched for the affluent client base supported by the exclusivity of Amex Card issuing and acquiring business in Georgia Despite high rate of bank debt growth in '05-'09, ample room for growth with total loans/GDP under 30%; retail loans/GDP under 10% Both corporate and retail lending stepped up in Georgia, Corporate loans up 18.0% YTD and Retail loans up 21.6% YTD Emphasis on micro loans, SMEs, consumer loans and mortgages in Georgia Focus on restructuring of Ukrainian operations, with options varying from further scale down to divesting Focus on high margin, unattended SME sector in Belarus; 19.99% of equity interest in BNB sold to IFC in 1H 2010 First stage of restructuring of equity investment business completed Controlling stake in investment management company sold Lobko BANK OF GEORGIA www.bog.ge/ir November 2010 Page 18#19LUSHOƆCML ¿563N BANK OF GEORGIA Intention to pay dividends November 2010#20Intention to pay dividends for 2010 # of Shares outstanding 31,252,553 27,154,918 25,202,009 31,306,071 III YE 2006 YE 2007 YE 2008 YE 2009 The new dividend policy will serve to further increase capital management discipline as we consider investing in our growth going forward Estimated dividend payout for 2010 performance GEL 9.4 million The Bank intends to propose the establishment of a progressive dividend policy at the 2010 AGM The intention is to recommend GEL 0.30 dividend per share in 2011 in respect of 2010 financial year performance Dividend payment is subject to management achieving 2010 financial targets outlined above The Bank anticipates increasing the dividend payment in the future The new dividend policy is to set dividend payments while taking into consideration the need to maintain proper balance between the ability to finance growth and preserving progressive dividend Loka BANK OF GEORGIA www.bog.ge/ir November 2010 Page 20#21LUSHOƆCML ¿563N BANK OF GEORGIA Governance November 2010#22A move to classical two-tier board structure Supervisory Board 7 non-executive SB members; non-executive Chairman • SB members ⚫ Neil Janin, Independent Director experience: Director at McKinsey & Company in Paris; Co-chairman of the commission of the French Institute of Directors (IFA); Chase Manhattan Bank (now JP Morgan Chase) in New York and Paris; Procter & Gamble in Toronto. Ian Hague, Firebird Management LLC ⚫ Allan Hirst, Independent Director . experience: 25 years at Citibank, including CEO of Citibank, Russia; various senior capacities at Citibank ⚫ Kaha Kiknavelidze, Independent Director currently managing partner of Rioni Capital, London based investment fund; previously Executive Director of Oil and Gas research team for UBS . Jyrki Talvitie*, East Capital ⚫ David Morrison, Independent Director * experience: senior partner at Sullivan & Cromwell LLP prior to retirement Al Breach, Independent Director experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs Hanna Loikkanen, East Capital - Advisor to Bank of Georgia Supervisory Board. Expected to be replaced by Hanna Loikkanen by the EGM to be held on 22 November 2010 Management Board Chief Executive Officer and 9 Executive members of Management Board MB members . · . · . Irakli Gilauri, CEO; formerly EBRD banker in Tbilisi and London, MS from CASS Business School, London Giorgi Chiladze, Finance; formerly CEO of BTA Bank (Georgia); Program Trading Desk at Bear Sterns, NYC Archil Gachechiladze, Corporate Banking; formerly Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University Avto Namicheishvili, Legal; previously partner at Begiashvili &Co, law firm in Georgia. LLM from CEU, Hungary ⚫ Irakli Burdiladze, Deputy CEO in charge of SB Real Estate; previously CFO at GMT Group, Georgian real estate developer. Masters degree from Johns Hopkins University . . • • Sulkhan Gvalia, Risk; founder of TUB, Georgian bank acquired by BOG in 2004 Murtaz Kikoria, acting CEO of BG Bank; formerly senior banker at EBRD; Head of Banking Supervision at the National Bank of Georgia. Mikheil Gomarteli, Retail Banking; 10 years work experience at BOG Nick Shurgaia, International Business; previously CEO of VTB Georgia, Senior Banker at EBRD, London; MBA from LBS ⚫ Vasil Revishvili, Head of Wealth Management; previously Head of the Investment Risk Unit and Senior Investment Manager at Pictet Asset Management in London and Geneva. MS in Finance from London Business School LOLEJN BANK OF GEORGIA www.bog.ge/ir November 2010 Page 22#23LUSHOƆCML ¿563N BANK OF GEORGIA Q3 2010 results highlights November 2010#24Q3 and 9 months 2010 P&L results highlights Millions unless otherwise noted Growth¹ Q3 2010 Q2 2010³ Positive consecutive q-o-q normalized Bank of Georgia (Consolidated, IFRS-Based) Net Interest Income Net Non-Interest Income Total Operating Income (Revenue)4 GEL US$ GEL US$ Q-O-Q Q3 2009 GEL Growth 2 US$ Y-O-Y (Unaudited) (Unaudited) (Unaudited) 56.5 31.3 51.7 28.0 9.4% 48.9 29.2 15.5% 34.7 19.2 30.9 16.7 12.3% 30.4 18.1 14.1% 91.2 50.5 82.5 44.8 10.5% 79.3 47.3 15.0% Recurring Operating Costs 51.0 28.2 47.8 25.9 6.7% 45.0 26.8 13.5% operating Normalized Net Operating Income³ 40.1 22.2 34.7 18.8 15.6% 34.3 20.5 16.9% leverage of 3.7% Net Non-Recurring Income (Costs) (1.6) (0.9) 1.5 0.8 NMF (1.9) (1.1) -13.6% Profit Before Provisions 38.5 21.3 36.2 19.6 6.2% 32.4 19.3 18.7% Net Provision Expense Net Income/ (Loss) EPS (basic) 14.2 7.9 12.6 6.8 12.8% 30.0 17.9 -52.6% 20.8 11.5 19.6 10.6 6.3% 2.6 1.6 NMF 0.66 0.37 0.63 0.34 6.3% 0.08 0.05 NMF EPS (diluted) 0.60 0.33 0.56 0.31 6.3% 0.08 0.05 NMF Millions unless otherwise noted Bank of Georgia (Consolidated, IFRS-Based) Net Interest Income Net Non-Interest Income Total Operating Income (Revenue)4 Recurring Operating Costs Normalized Net Operating Income Net Non-Recurring Income (Costs) Profit Before Provisions Net Provision Expense Net Income/ (Loss) EPS (basic) EPS (diluted) 'Compared to Q2 2010, growth calculations based on GEL values. 2 Compared to the same period in 2009; growth calculations based on GEL values. 3 Q2 2010 and 6 months 2010 Consolidated numbers have been Reviewed 4 Revenue includes Net Interest Income and Net Non-Interest Income.. 5 Normalized for Net Non-Recurring Costs. LOLEJN BANK OF GEORGIA www.bog.ge/ir 9 months 2010 9 months 2009 Growth 2 GEL US$ GEL US$ Y-O-Y (Unaudited) (Unaudited) 153.4 84.9 150.8 89.9 1.7% 96.2 53.3 90.8 54.1 5.9% 249.6 138.2 241.6 144.1 3.3% 145.1 80.3 135.9 81.1 6.7% 104.5 57.9 105.7 63.0 -1.1% (3.4) (1.9) (2.4) (1.4) 40.9% 101.1 56.0 103.2 61.6 -2.1% 34.2 18.9 102.8 61.3 -66.8% 57.2 31.7 3.4 2.0 NMF 1.83 1.01 0.11 0.06 NMF 1.64 0.91 0.10 0.06 NMF November 2010 Page 24#2530 September 2010 Balance Sheet results highlights Millions, unless otherwise noted Bank of Georgia (Consolidated, IFRS-Based) Q3 2010 Q2 2010 Q3 2009 GEL US$ GEL US$ GEL US$ (Unaudited) (Unaudited) (Unaudited) Net Loans 2,061.4 1,141.1 1,982.5 1,075.0 1,659.3 989.4 Total Assets Client Deposits Borrowed Funds 3,615.6 2,001.5 3,423.6 1,856.4 2,980.2 1,777.0 1,658.5 918.1 1,487.2 806.4 1,182.5 705.1 881.5 488.0 945.6 512.7 918.6 547.7 Total Liabilities 2,936.0 1,625.4 2,773.8 1,504.1 2,261.6 1,348.5 Shareholders' Equity 679.6 376.2 649.8 352.3 718.5 428.4 Book Value Per Share, GEL & US$ 21.69 12.01 20.74 11.25 22.96 13.69 Tier I Capital Adequacy Ratio (BIS) 19.9% 20.3% Total Capital Adequacy Ratio (BIS) 32.6% 32.7% Tier I Capital Adequacy Ratio (NBG) 15.2% 15.8% Total Capital Adequacy Ratio (NBG) 15.7% 14.5% Net Loans Total Assets Client Deposits Borrowed Funds Total Liabilities Shareholders' Equity Book Value Per Share, Labo BANK OF GEORGIA www.bog.ge/ir Change Change Change Q-O-Q YTD Y-O-Y 4.0% 22.8% 24.2% 5.6% 24.1% 21.3% 11.5% 30.3% 40.3% -6.8% -3.5% -4.0% 5.8% 26.8% 29.8% 4.6% 13.6% -5.4% 4.6% 13.5% -5.5% November 2010 Page 25#26Assets Total assets, Consolidated GEL mln Gross loans grew 3.1% q-o-q, up 21.4% YTD and up 23.1% y-o-y 4,000 3,615.6 3,400.7 3,500 3,423.6 3,147.7 3,154.3 3,258.9 3,186.8 3,124.1 2,980.2 3,000 2,907.8 2,913.4 2,500 2,247.3 Record high 2,106.7 1,855.7 2,179.7 2,059.7 2,189.4 2,039.5 2,000 1,825.7 1,957.3 1,897.3 1,851.9 1,500 1,000 500 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2008 2008 2008 2009 2009 2009 2009 2010 Gross loans Q2 2010 Q3 2010 Corporate gross loan portfolio growth GEL m In 1,200 1,000 800 600 400 200 0 874 875 826 794 -5% +6% 928 870 806 765 35.9% Loan book, gross, Consolidated* BG Bank, 9% BNB, 2% GEL 192 mln GEL 52 mln CB, 44% GEL 999 mln RB & WM, 45% GEL 1,022 mln *Does not include inter company eliminations Retail gross loan portfolio growth GEL min 1,200 21.6% 1,039 1,016 951 1,000 880 800 656 600 755 1,000 981 931 932 930 922 861 847 831 807 -9% +17% -6% -7% -5% +15% +8% +7% +2% 400 +15% +22% +1% +7% -7% -8% -3% -3% +5% +10% +5% YE 2007 31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Mar-09 30-Jun-09 30-Sep-09 31-Dec-09 31-Mar-10 30-Jun-10 30-Sep-10 LOLEJN BANK OF GEORGIA www.bog.ge/ir 200 YE 2007 Q1 08 Q2 08 Q3 09 Q4 08 Q109 Q2 09 Q3.09 Q4 09 Q1 10 02 10 Q3 10 November 2010 Page 26#27☑No.1 corporate bank in Georgia ☑Circa 30.0% market share based on customer deposits(1) Circa 29.6% market share based on corporate loans(2) ☐ Integrated client coverage in key sectors 90,508 clients of which 9,242 served by dedicated relationship bankers Circa 47% market share in trade finance and documentary operations(2) Second largest leasing company in Georgia(2) Georgian Leasing Company (GLC) Increased the number of corporate clients using the Bank's payroll services from 1,567 in Q2 2010 to 1,657 in Q3 2010 More than 6,000 corporate accounts were opened at the bank in Q3 2010, bringing the total number of current accounts to 171,052 Loans Corporate loan book breakdown, BoG Standalone Pharmaceuticals and Healthcare, 1% Other, 16% Industry & State, 10% Construction & Real Estate, 18% Trade, 30% FMCG, 14% Energy, 10% Leadership in consumer lending • Number of Retail Clients ■ Number of consumer loans outstanding • Volume of consumer loans outstanding (GEL mln) Credit Cards Outstanding, of which • ☐ American Express cards • Number of Solo clients outstanding, (premier banking) Retail loan book breakdown, BoG Standalone Micro loans, 19% Mortgage loans, 40% Credit cards and overdrafts, 14% Consumer and other, 27% Retail loans originated 300 GEL min 350 Q3 2009 Q2 2010 Q3 2010 701,441 714,484 729,578 53,264 52,423 58,121 250 125.6 105,040 130.9 146.9 81,119 94,480 19,600 34,359 200 183.3 177.5 1,043 1,608 150 122.1 100 50 235.6 266.9 317.6 140.2 74.9 68.8 55.9 104.9 97.5 278% 128.2 186.9 211.3 0 Q1'07 Q2 '07 Q3'07 Q4 '07 Q1'08 Q2 '08 Q3 '08 Q4 '08 QI '09 Q2'09 Q3 '09 Q4 '09 Q1'10 Q2' 10 Q3 '10 Lobko BANK OF GEORGIA www.bog.ge/ir November 2010 Page 27#28Standalone Loan origination Mortgage loans (RB & WM) GEL mln 450 400 350 300 250 200 150 100 550 +103% 46.7 23.1 +26% 58.7 Consumer loans (RB & WM) GEL mln +16% +3% 180 160 358.8 406.1 417.3 140 120 100 80 828 +22% +8% 79.9 65.3 60.3 60 40 20 Volume of Mortgage ■Q2 2010 Loans Outstanding ■Q3 2010 Volume of Mortgage Loans Originated Q3 2009 Micro loans (RB & WM) +18% -5% 159.7 143.3 135.5 Volume of Consumer Loans Outstanding Volume of Consumer Loans Originated ■Q3 2009 ■■Q2 2010 ■Q3 2010 Other RB & WM loans +16% GEL mln 300 +70% 182.7 250 156.8 GEL mln 200 180 160 140 120 +9% 100 92.3 +179% 78.3 80 50 71.7 60 40 20 20 25.7 Volume of Micro Loans Originated ■Q3 2009 ■Q2 2010 ■■Q3 2010 Lobko BANK OF GEORGIA www.bog.ge/ir Volume of Micro Loans Outstanding 200 150 100 100 50 50 +62% +36% 3.7 5.0 8.1 Volume of Other RB & WM Loans Originated* -2 % -2% 272.5 267.5 262.1 Volume of Other RB & WM Loans Outstanding Q3 2009 Q2 2010 Q3 2010 November 2010 Page 28#29Standalone RB cross-selling Product/client ratio 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 3.5 3.3 3.2 3.0 2.7 4.0 RB loans penetration rate* 60% 55 3.5 50% 46.4% 47.9% 47.6% 46.8% 3.1 44.3% 44.5% 44.8% 45.5% 3.0 2.8 2.8 2.8 2.8 2.8 3.0 39.3% 2.7 40% 34.1% 35.8% 2.5 30% 31.7% 30.9% 20 2.0 29.1% 17.0% 20% 24.2% 1.5 15 11.8% 9.2% 7.6% 7.6% 7.9% 8.7% 10% 1.0 2.0% 2.2% 2.1% 1.9% 1.5% 1.1% 0.8% 0.6% 0.6% 0.7% 0.8% 0% 0.5 0.9% 1.0% 1.1% 1.2% 1.2% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 1.1% 1.1% 1.1% 1.1% 1.2% 1.2% Dec-09 Mar-10 Jun-10 Sep-10 Mortgage Loan Penetration Rate Micro Loan Penetration rate Consumer Loan Penetration Rate Other Loans Penetration Rate 0 0.0 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 31-Mar- 30-Jun-10 30-Sep-10 10 Number of clients (LHS) Number of products (LHS) Product/Client Ratio (RHS) Cards penetration rate* 120% 104.0% 98.7% 95.6% 100% 80% 60% Current accounts & deposits penetration rate* 140% 122.4% 121.7% 119.4% 114.3% 120% 105.0% 111.2% 111.1% 110.8% 111.3% 112.8% 121.5% 15.4% 73.2% 100% 67.6% 66.1% 66.2% 65.7% 64.4% 62.6% 80% 60%- 40% 31.4% 26.9% 23.6% 24.8% 40% 20.6% 17.5% 19.0% 15.0% 20.0% 19.8% 19.5% 16.4% 15.7% 20% 10.56% 11.38% 11.3% 12.9% 14.7% 20%- 14.4% 14.3% 14.4% 11.3% 5.6% 6.7% 7.3% 8.9% 7.1% 7.6% 14.8% 0% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Debit Cards Penetration Rate Credit Cards Penetration Rate * Calculated as percentage of Bank of Georgia clients for the period Lobko BANK OF GEORGIA www.bog.ge/ir 0% Mar-08 Jun-08 Sep-08 9.2% 9.7% 10.3% 10.8% Dec-09 Mar-10 Jun-10 Sep-10 Dec-08 Mar-09 Jun-09 Sep-09 -Demand & Time deposits Penetrartion rate Universal Current Accounts Penetration Rate - Standard Current Accounts Penetration Rate November 2010 Page 29#30Loan portfolio quality Bank of Georgia Loan quality under the following stress tests standalone NPLs declined 25.3% q-0-q to GEL 96.5 million, while BG Bank' (Ukraine) NPLs declined 22.1% q-o-q to GEL 32.7 million Domestic and international economic crises 17% devaluation of Lari against US$ in one day in November 2008 Political tension in Georgia peak in Spring 2009 NPLs, BoG Standalone GEL mln NPLs, Consolidated GEL mln 200 554.4% 180 160 140 120 100 600% 173.7 168.9 500% 148.8 32.1 44.6 140.0 140.0 131.5 30.0 400% 24.0 28.7 110.1 17.2 35.0 69.8 59.4 300% 80 208.4% 138.3% 53.1 61.8 75.8 36.8 60 61.5 3.8 200% 42.8 141.4% 118.8% 116.1% 99.3% 124.1% 106.6% 113.5% 40 169.1% 32.1 100% 23.3 59.8 20 20 19.0 24.4 22.4 11.3 33.3 35.5 10.9 69.8 67.0 50.2 8.1 9.7 12.0 54.1 65.7 0 0% Q1 2008 Q2 2008 03 2008 Q4 2008 RB & WM Q1 2009 CB Q2 2009 Other* Q3 2009 Q4 2009 Q1 2010 NPL coverage ratio Q2 2010 Q3 2010 * Other NPLs include BNB and BG Bank Loan loss reserve, Consolidated 160 6.8% 140 120 100 80 7.5% 7.5% 8% GEL mln 7.4% 250 6.9% 6.9% 7.4% 6.5% 7% 7.0% 6.7% 6.4% 6.5% 5.5% 4.9% 5,0% 200 6% 6.3% 6.3% 5% 150 5.0% 9.4% 9.1% 9.2% 9.0% 10% 8.3% 9% 7.8% 8% 7% 6% 4.7% 5% 80 4% 3.2% 60 111.3 118.7 136.8 129.2 115.9 93.0 100 197.2 4% 3% 173.6 166.3 180.0 186.0 2.1% 2.1% 147.7 3% 96.5 129.0 127.9 1.9% 2.0% 40 108.8 57.7 1.3% 1.7% 20-1.2% 39.6 44.4 1% 32.1 23.3 0 19.0 0 0% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010. 2% 50 2% 1% 0% Q1 2008 Q2 2008 Q3 2008 Q4 2008Q1 2009Q2 2009Q3 2009 Q4 2009Q1 2010Q2 2010Q3 2010 Loan loss reserves, Consolidated Reserve For Loan Losses To Gross Loans, BoG Consolidated NPLS % of Gross loans Loan loss reserve as % of gross loans LOLEJN BANK OF GEORGIA www.bog.ge/ir November 2010 Page 30#31Total Client deposits grew by 40.3% y-o-y in Q3 '10 (11.5% q-o-q) WM client Liabilities, Consolidated Client deposits GEL mln 2,000 +61.8% Record high Wealth Management deposits +210.5% GEL mln 218.7 211.2 220 1,659 200 180.7 1,487 146.1 deposits grew 1,395 1,394 180 163.1 1,326 144.9 1,272 142.9 62.7% y-o-y 228.2 160 1,202 1,193 233.2 1,183 1,133 145.7 134.4 (3.6% q-o-q) in Q3 '10 229.4 147.7 1,025 128.6 799.4 140 134.0 967 682.5 115.7 656.1 120 107.8 98.6 681.5 587.6 93.3 652.7 626.2 596.7 100 81.6 576.2 605.2 518.4 76.5 218.7 70.4 FRB client 80 211.2 180.7 deposits 51.5% 81.6 163.1 76.5 y-o-y (10.2% q- 363.6 403.4 70.4 98.6 326.0 320.4 134.4 60 93.3 107.8 280.4 283.1 326.3 376.1 414.7 448.6 494.2 40 o-q) in Q3 10 20 -66 FCB client Q1 Q2 Q3 2008 2008 2008 Q4 2008 deposits grew RB Client Deposits Q1 Q2 2009 2009 WM Client Deposits Q3 Q4 Q1 2009 2009 2010 CB Client Deposits Q2 Q3 0 2010 2010 Other Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 34.0% y-o-y Retail banking deposits +76.3% (17.1% q-o-q) in GEL mln Q3 10 500 GEL 225 mln of borrowed funds repaid in 2009 403.4 400 363.6 300 Volume of CB deposits outstanding GEL mln 900 494.2 448.6 800 414.7 152.5 700 376.1 135.6 600 145.6 104.6 326.3 188.7 326.0 320.4 279.0 185.8 153.6 119.3 139.4 71.7 500 199.5 75.1 283.1 116.3 280.4 53.6 74.2 69.3 78.1 400 90.2 39.2 26.8 79.2 Loka 200 100 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 BANK OF GEORGIA www.bog.ge/ir 300 542.3 475.2 200 410.4 363.3 382.3 403.2 435.5 370.0 349.9 350.2 322.9 100 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Volume of CB time deposits outstanding Volume of CB demand deposits outstanding Volume of CB current accounts outstanding November 2010 Page 31#32Deposits Number of RB & WM time deposits issued 25,000 20,000 19,403 17,855 17,136 15,000 10,000 5,000 10,912 12,051 15,312 Volume of RB & WM time deposits issued GEL mln 250 21,056 18,322 18,739 19,092 18,629 200 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Deposit yields 12% 150 33.0 16.9 40.6 40.7 8.0 16.2 34.6 25.8 34.9 20.0 100 36.0 159.8 121.7 125.9 119.1 128.4 112.8 113.7 116.7 50 100.2 94.8 99.0 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Volume of RB time deposits issued Borrowed funds Volume of WM time deposits issued GEL mln 1200 10.4% 10.3% 10.3% 9.8% 9.9% 9.6% 10% 9.1% 9.1% 1000 947.8 8.6% 8.2% 8.1% 8.0% 8.4% 8.2% 903.6 8.0% 7.9% 7.7% 7.9% 8% 7.3% 795.1 7.5% 7.0% 6.9% 8.0% 6.6% 6.7% 800 7.6% 7.2% 5.8% 7.1% 5.7% 5.6% 6% 5.4% 5.0% 5.8% 600 4.0% 3.8% 4% 2% 400 200 0% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 04 2009 Q1 2010 Q2 2010 Q3 2010 -RB Deposit Yields, BoG Standalone CB Deposit Yields, BoG Standalone 0 Blended Deposit Yields, BoG Standalone LOLEJN BANK OF GEORGIA www.bog.ge/ir 1,162,8 1,137.8 -24.2% 1,011.4 945.6 913.3 918.6 912.0 881.5 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 November 2010 Page 32#33Equity & Capital adequacy Total Shareholder's equity GEL mln 900.0 Risk weighting of FX denominated assets at 150% according to the National Bank of Georgia standards Risk weighting of FX denominated assets will be 600.0 783.0 746.7 739.3 718.8 711.8 709.9 718.5 25% NBG capital adequacy ratios, BoG Standalone 679.6 649.8 15% 611.7 598.4 20.4% 19.7% 20% 18.3% 18.2% 17.8% 17.7% 16.6% 16.4% 15.8% 15.8% 15.2% 13.7% 10% 16.3% 16.8% 15.1% 15.5% 15.9% 15.7% 13.5% 17.4% 18.4% 21.2% 14.5% 14.2% 5% increased to 175% 300.0 from January Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 Q3 0% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio Q3 2010* *Pro forma for new regulations 2010 BIS capital adequacy ratios, BoG Consolidated Share price performance BGEO is just 40% US$ 20.00 below the IPO 36.4% 34.6% 35.6% price 34.3% 34.7% 35% 32.7% 32.6% IPO Price 18.00 16.00 30% 134.2% y-o-y Other LSE listed 25.3% 26.3% 25.2% 25.0% 25.0% 109.0% YTD 14.00 CIS banks are 30 September 2010 BV/share US$12.01 24.7% 25% 23.5% 22.6% 22.4% 21.9% trading 40%-60% 21.6% 12.00 20.3% 19.9% below IPO price 20% 25.8% 25.8% 10.00 15% 8.00 10% 5% 0% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 ■Tier I Capital Adequacy Ratio Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 ■Total Capital Adequacy Ratio Lobko BANK OF GEORGIA www.bog.ge/ir 6.00 4.00 2.00 0.00 1-Jan-09 YTD # of GDRs traded 19.1 mln Volume: US$ 222.8 mln 1-Feb-09 1-Mar-09 1-Apr-09 1-May-09 1-Jun-09 1-Jul-09 1-Aug-09 1-Sep-09 1-Oct-09 1-Nov-09 1-Dec-09 1-Jan-10 1-Feb-10 1-Mar-10 1-Apr-10 1-May-10 November 2010 Page 33#34Georgia accounts Revenue, Consolidated for 81.5% of total Revenue consolidated -4.5% +3.3% +67.1% YTD revenues, 300.0 BG Bank 4.2% and BNB 3.6% 250.0 Standalone 200.0 Revenue grew 8.4% q-o-q while standalone Total 150.0 +68.9% +104.1% 151.4 64.0 Revenue as a function of loan book change 2,200 2,150 252.9 249.6 241.6 2,100 2,050 88.5 96.2 90.8 2,000 1,950 1,900 1,850 164.5 150.8 153.4 1,800 1,750 1,700 Recurring 100.0 74.2 Operating Costs 43.9 33.8 grew by 7.4% q- 50.0 87.4 16.9 o-q, achieving 40.4 27.0 positive standalone 0.0 9 months 2005 9 months 2006 9 months 2007 9 months 2008 9 months 2009 9 months 2010 operating leverage 1.4% on q-o-q and 3.6% Net interest income Revenue, quarterly Net non interest income +15.0% Revenue GEL 241.6 mln Revenue GEL 249.6 mln Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 Gross loans Record high Revenue by segments Q3 2010 +10.5% q-0-q BNB 3.5%, GEL3.2 mln (+6.3% q-o-q) BG Bank 3.3%, GEL3.0 mln Aldagi BCI 4.5%, GEL4.1 mln (-31.2% q-o-q) (-30.1% q-o-q) Other 6.5%, GEL5.9 mln GEL mln on y-o-y basis 100 85.7 86.6 91.2 90 86.1 7.8 81.7 81.1 5.0 82.5 10.5 7.8 80.6 79.3 77.4 80 6.5 9.4 7.1 75.9 9.0 14.9 8.0 10.7 9.5 10.4 1.7 10.7 70 8.8 10.8 2.5 13.2 8.8 1.9 1.4 12.9 2.2 7.1 6.5 60 1.4 10.2 10.9 1.8 2.3 2.2 13.7 7.3 11.1 10.2 11.6 2.2 10.9 12.0 12.6 10.3 50 40 30 55.8 58.9 56.4 56.5 52.4 49.8 49.5 48.9 51.7 46.0 45.3 20 10 62.0% of Total Revenue 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Net Interest Income Net Fee & Commission Income Net Income From Documentary Operations Net foreign currency related income Net Other Non-Interest Income Lobko BANK OF GEORGIA www.bog.ge/ir BOG Standalone 82.2%, GEL74.9 mln (+8.4% q-o-q) November 2010 Page 34#35Costs, Consolidated Recurring operating costs GEL mln 160 +6.7% y-o-y 145.1 135.9 Employees 454 Q3 2010 3,060 5,313 468 143.0 Q2 2010 2,963 140 120 100 80 60 60 83.9 26.0 الاس 42.3 40 20 20 26.4 9.8. 16.6 20.5 57.9 21.9 5.118 593 Q1 2010 2,825 5,048 61.6 +0.5% y-o-y 621 Q4 2009 2,674 68.8 14,781 617 68.4 Q3 2009 2,669 4,798 707 Q2 2009 2,665 4,914 757 Q1 2009 2,692 4,964 786 +13.0% y-o-y Q4 2008 2,741 4,949 842 81.4 Q3 2008 76.3 3,853 6,196 67.5 Q2 2008 836 3,619 5,911 824 Q1 2008 3,056 4,926 Personnel costs Recurring operating costs 0 9 months 2005 9 months 2006 9 months 2007 9 months 2008 9 months 2009 9 months 2010 Other recurring operating costs 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Group Consolidated BoG Standalone BG Bank Costs by segments, Q3 2010 GEL mln 60 50 +6.7% q-o-q 49.6 48.9 51.0 47.9 47.8 46.3 46.6 46.3 44.5 44.6 45.0 40- 21.3 24.1 21.6 21.9 18.7 24.9 23.1 24.1 22.9 22.7 22.6 30 20 20 27.3 28.4 25.7 25.9 27.0 23.1 22.0 23.2 22.3 22.5 23.4 10 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Personnel Costs Other Recurring Operating Costs LOLEJN BANK OF GEORGIA www.bog.ge/ir Other, 15.7% Aldagi BCI, 4.6% GEL 2.4 mln (-48.6% q-0-9) BNB, 4.9% GEL 2.5 mln (+25.3% q-o-q) BG Bank, 6.4% GEL 3,3 mln (-32.9% q-o-q) GEL 8.0 mln BoG standalone, 68.4% GEL 34.9 mln (+7.4% q-o-q) November 2010 Page 35#36Consolidated Net Normalized Operating profit, Provision expense Normalized net operating income, Consolidated GEL mln 45 Net provision expense BoG standalone GEL mln 160 +15.6% q-0-940.1 140 34.7 200 Operating Income (NNOI) 40 38.7 37.3 36.6 36.3 37.1 increased 15.6% 34.3 35 34.3 q-o-q up 16.9% 30.8 29.6 30 у-о-у 25 120 103.9 100 60 80 Related to the armed conflict in August 2008 Consolidated 20 Net provision 60 40 expenses of 15 GEL 14.2 mln 10 20 8.6 6.7 29.6 24.0 18.2 17.7 12.3 6.5 9.9 in Q3 2010, (4.5) 0 5 GEL 12.6 mln in Q2 2010 and -20 0 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2009 2009 2009 Q4 Q1 Q2 2010 2010 Q3 2010 GEL 30.0 mln in Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 -40 40 Q3 2009 improved by 52.6% y-o-y GEL mln Profit (loss) before provisions/Net Income/Loss, Consolidated Net operating cash flow 9m 2010 9m 2009 60 45.1 unaudited 40.5 36.8 36.2 38.5 Bank of 40 33.7 34.0 32.4 31.9 28.3 26.4 Georgia 20 Standalone Net 8.7 5.1 0 provision (1.1) (4.3) LL 20.8 19.6 16.8 Interest paid 2.6 Cash flow from operating activities Interest received Fees and commissions received 303,443 (151,331) 283,745 (167,643) 54,013 49,489 Fees and commissions paid (9,581) (9,155) expenses of Q3 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Net realized gains from trading securities 2,564 2,169 -20 2010 declined -40 by 44.3% y-o-y Net realized gains from investments securities Net realized gains from foreign currencies Recoveries of loans to customers 277 24,892 19,282 15,354 8,213 -60 Insurance premiums received 33,623 31,600 (59.0) Net Income for Insurance claims paid (21,162) (21,492) -80 (76.1) Other operating income received 10,207 10,605 nine months Salaries and other employee benefits paid (70,812) (69,405) 2010 was GEL -100 General and administrative and operating expenses paid (52,558) (54,857) (102.3) 57.2 mln Net cash flow from operating activities 138,652 82,828 -120 Growth rate 67.4% Profit/(Loss) Before Provisions. Net Income Loka BANK OF GEORGIA www.bog.ge/ir November 2010 Page 36#37Profitability & selected ratios Cost of funds, Loan yields Net loans/Client deposits GEL mln 120 200% 25% 180% 174.4% 170.6% 168.7% 19.3% 100 19.4% 18.6% 19.7% 20.1% 20.2% 20.0% 160.6% 160% 20% 147.8% 20.1% 136.9% 140% 80- 98.8 101.8 94.5 93.7 89.0 95.0 104.3 110.4 15% 120% 60 7.2% 3% 40 49.4 42.4 8.8% 45.1 85% 7.8% 20 100% 49.8 43.0 44.8 8.6% 10% 53.9 80% 52.7 8.4 60% 5% 40% 0 0% 20% Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 0% Interest Income Interest Expense Cost of Funds Loan Yield Net interest margin (annualized) 12% 140.3% 131.9% 133.3% 127.5% 124.3% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Cost Income Ratio 200% 9.8% 10.1% 10% 9.1% 8.9% 9.3% 9.8% 9.1% 9.0% 160% 9.9% 9.0% 8.5% 8.2% 9.1% 8.0% 8.3% 8% 8.1% 8.6% 8.8% 8.9% 8.6% 8.1% 7.5% 7.8% 8.1% 120% 6% 4% 2% 0% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Net Interest Margin, Group Consolidated Net Interest Margin, BoG Standalone Lobko BANK OF GEORGIA www.bog.ge/ir 90.0% 128.3% 65.3% 80% 60.8% 59.1% 52.9% 54.9% 57.8% 50.5% 58.0% 53.9% 56.1% 57.8% 60.7% 49.0% 41.0% 50.8% 49.6% 40% 50.0% 44.0% 33.0% 30.8% 31.4% 31.7% 26.7% 28.8% 28.1% 29.0% 29.6% 26.9% 0% Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Cost/Income Ratio, Consolidated -Cost/Income Ratio, Bank of Georgia Standalone -Personnel costs/Total revenue, Consolidated November 2010 Page 37#38Summary Operating environment in Georgia is improving and 2010 looks promising for Bank of Georgia: Consumer confidence and economic activity is increasing with a 11.5% q-o-q and 40.3% y-o-y increase in client deposits in Q3 2010; GDP real growth rate: 8.4% y-o-y Q2 2010; 6.0% 2010F; growth mainly driven by donor money inflows, export growth and credit growth in nine months 2010; VAT collection up by 20%+ y-o-y in recent months, YTD 2010 trade turnover up by 16.9% y-o-y, NBG reserves still on high level at around USD 2 bln, exceeding M2 by 1.5 times Positive operating leverage achieved of 2.6% y-o-y and positive consecutive q-o-q normalized operating leverage of 3.7% driven by: Second consecutive decrease of cost of funds, 8.6% in Q1 2010, 8.4% in Q2 2010, 7.9% in Q3 2010, as a result of deposit rate cuts Solid growth of higher yielding retail loan book up 21.3% YTD Increase of Net Interest Income as lending activity picked up Record high: Revenue of GEL 91.2 mln, up 10.5% q-o-q, up 15.0% y-o-y Normalized net operating income of GEL 40.1 mln, up 15.6% q-o-q, up 16.9% y-o-y Gross loans up 3.1% q-o-q, up 23.1% y-o-y Client deposits up 11.5% q-o-q, up 40.3% y-o-y As of 31 July 2010, the outstanding Eurobonds maturing in February 2012 amounted at US$149 million, out of original US$ 200 million, in August 2010 the Bank has signed agreements for US$ 50 million 5-year credit facilities with EBRD, US$ 50 million 7-year Financing Package agreement signed with EFSE in November 2010 YTD loan book growth funded through deposit inflows locally and internationally. WM Representative Office opened in London Outlook for Q4 2010 • Growth expected to continue in Q4 • Higher yielding retail loan book expected to grow faster in 2nd half of the year Confident to deliver previously announced management target of net profit GEL 72 mln for 2010 with 10% upside risk We came out strong from the downturn and are well positioned to take advantage of our high liquidity and strong capital to achieve growth at the right price.... .....by implementing our strategy to become more efficient, deposit funded lending machine Lak BANK OF GEORGIA www.bog.ge/ir November 2010 Page 38#39LUSHOƆCML ¿563N BANK OF GEORGIA EconomyAnnex November 2010#40FDI and Net remittances Cumulative net FDI breakdown by origin, 2004 - Q2 2010 Country FDI breakdown by sectors, Q2 2010 Financial sector, 6.1% Agriculture, fishing, 1.2% Other services, 14.3% Industry, 21.3% Energy sector, - US$ '000s % of total UK 770,488 11.6% UAE 613,245 9.2% Turkey 565,356 8.5% Netherlands 571,968 8.6% British Virgin Islands 472,830 7.1% Real estate, 16.9% Kazakhstan 258,077 3.9% Azerbaijan 330,016 5.0% Czech Republic 341,867 5.1% Cyprus 275,657 4.1% Subtotal 4,199,503 63.2% Other countries 2,449,570 Total 6,649,073 36.8% 100.0% Cumulative net remittances, 2008 Q3 2010 Country Russia USA Greece Spain Ukraine Turkey UK Israel Kazakhstan Germany Other countries Total Transports and communications, 53.0% 1.3% Construction, - 4.1% Hotels and restaurants, -7.6% Net remittances by countries, Q3 2010 Other countries, 10.9% Germany, 1.6% US$ '000s % of total Kazakhstan, 0.9% 1,371,750 59.8% Israel, 1.3% 176,903 7.7% UK, 0.7% 146,651 6.4% Turkey, 3.7% 54,768 2.4% 139,225 6.1% Ukraine, 3.3% 57,333 2.5% Spain, 2.2% 16,100 0.7% Greece, 6.2% 23,326 1.0% 20,136 0.9% 21,340 0.9% 268,224 11.7% USA, 8.0% 2,295,757 100.0% Source: National Bank of Georgia, National Statistics Office of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir Russia, 61.4% November 2010 Page 40#41FX Reserves and Inflation FX reserves, $ mln 2,500 2,000 2003-2009 CAGR 48.6% Fx reserves FX/M2 1.3 1.8 1.7 1.5 1.6 1.4 1.1 1.0 1.2 1,500 US$ 2,20 bn 1.0 0.8 0.8 US$ 2.11 bn 0.8 1,000 0.8 US$0.93 bn US$1.48 bn US$0.49 bn US$ 1.36 bn 500 US$0.38 bn US$0.19 bn 0.6 0.4 0.2 0.0 2003 2004 2005 2006 2007 2008 2009 Sep-10 NBG interventions Inflation NBG Interventions Average Lari/US$ 140 16 600 2.5 115.7 109.2 107.2 14 432.4 120 106.0 101.6 105.9 105.2 12 400 100 9.4% 2.0 7.9% 10 79 9.8% 10 10.40 5.8% 8 200 80 9.6% 9.3% 10.1% 4.4% 3.7% 156.7 124.0 197.0 6 0 (42.9) (51.0) 1.5 60 60 5.2% 2004 2005 2006 2007 2008 2009 Mar '10 Jun-10 Sep-10 40 (200) (182.7) 1.0 10 2.2% 2.8% 0 20 (400) (341.2) 0 0.5 (600) (660.8) Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Mar-10 Jun-10 Sep-10 (800) 0.0 Loka Source: National Bank of Georgia, Ministry of Finance of Georgia BANK OF GEORGIA www.bog.ge/ir Real effective rate, Jan05-100 (LHS) CPI (e-o-p) CPI (average) November 2010 Page 41#42Public debt: No burden to Public Finances Georgia's economy is quite unleveraged compared to other emerging market economies Georgia's public debt is 40.8% of GDP in 2009 down from 58.0% in 2003 The external debt is all multilateral or bilateral and significant share is highly concessional This explains why the government debt service burden is low Eurobonds debut issuance of US$500 mln in April 2008, maturity date 2013 Breakdown of public debt US$ billion 6.0 4.0 60.0% 46.1% 5.0 52.5% 50.0% 1.03 40.3% 32.8% 1.00 40.8% 40.0% 0.97 3.0 26.4% 30.0% 0.83 28.5% 0.85 0.89 0.85 4.15 2.0 20.0% 3.38 2.68 1.86 10.0% 1.73 1.70 1.79 10 1.0 External public debt service US$ mln 180 8.8% 160 140 120 100 60 80 60 40 40 20 7.3% 7.1% 110.6 103.8 0 2004A 2005A 152.2 0.0 0.0% 2004A 2005A 2006A 2007A 2008A 2009 A 2010F External public debt Internal public debt Total public debt as % of GDP Source: "The Georgian Economy Overview", Government of Georgia Presentation, Public debt as % of GDP, 2009 Russia Turkey 10% 9% Bulgaria 8% Ukraine 7% Lithuania 6% 5.20% Slovak Republic 4.4% 5% 169.3 Georgia 4% 136.7 Poland 3.4% 118.7 3% 102.1 Latvia 2.9% 2% Kazakhstan Hungary 2006A 2007 A 2008A 2009A 1% 0% 2010F External debt service External debt service as % of budget revenue Source: "The Georgian Economy Overview", Government of Georgia Presentation, June 2009. Labkon BANK OF GEORGIA www.bog.ge/ir Estonia Czech Republic 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: World Bank, International Monetary Fund November 2010 Page 42#43Fiscal indicators: The worst seems past Overall fiscal balance of the state budget GEL mln 0 0% 2006 2007 2008 2009 2010F 2011F -200 -1% (468.9) -400 (815.7) -2% (935.7) -600 -3% (1,258.6) (1,390.1) -4.5% -800 -4% -3.4% (1,720.5) -1,000 -5% -4.8% -1,200 -6% -1,400 -7% -6.6% -7.3% -1,600 -8% -1,800 -9% -2,000 -9.4% -10% Overall fiscal balance Fiscal revenue performance GEL mln 700.0 600.0 500.0 400.0 300.0 200.0 100.0 Overall fiscal balance as % of GDP 0.0 January February March April May ■2007 June July August September October November December 2008 2009 2010 Source: National Bank of Georgia, National Statistics Office of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir November 2010 Page 43#44Trade structure Import structure by country, Q3 2010 Ferrous Metal Paper, 2.0% Products, 2.7% - Sugar, 2.9% Export structure by country, Q3 2010 Plastic, 3.9% Cereals, 3.6% Pharmaceuticals, 3.8% Apparel & footwear, 3.7% Ferrous Metals, 2.9% Vehicles, 8.8% Others, 31.7% Mechanical Equipment & Oil & Gas, 18.6% Turkey, 9.1% Other, 18.5% Moldova, 3.7% China, 0.9%- United Arab Emirates, 1.5% Kazakhstan, 2.2%- Russia, 2.0% USA, 8.4% Armenia, 14.0% EU Countries, 17.9% Azerbaijan, 13.6% Electrical Machinery, 15.4% Import structure by product, Q3 2010 -Canada, 3.0% -Ukraine, 5.2% Export structure by product, Q3 2010 Kazakhstan, 1.0% Armenia, 3.5%- Turkmenistan, 4.4% USA, 4.4% Others, 23.5% EU Countries, 28.6% Others, 19.2% Ferrous Metals, 22.9% Sugar, 0.1% Vessels & Aircraft, Pharmaceuticals, 3.8% 2.1% Turkey, 11.8% Oil & Gas, 5.1% United Arab Emirates, 1.9% China, 4.6% Russia, 2.4% Ukraine, 7.4% Source: National Statistics Office of Georgia www.bog.ge/ir LOORIN BANK OF GEORGIA. Azerbaijan, 6.5% Equipment & Rail Cars, 3.7% Fertilizers, 4.4%- Cement, 0.2%- Gems & Precious Stones, 5.9% Vehicles, 18.5% Beverages, Spirits & Vinegar, 8.3% Ores, 5.6% November 2010 Page 44#45LUSHOƆCML ¿563N BANK OF GEORGIA Georgian banking sector - key trends 2007- Q3 2010 November 2010#46GEL/US$ Period End 40% Peer group's market share in total assets YE 2006 1.71 35% 32.9% 33.0% °34.2% YE 2007-1.59 YE 2008 1.67 30% Q1 2009- 1.67 Q2 2009 1.66 25% Q3 2009=1.68 22.0% 20.8% YE 2009 1.69 20% 20.7% Q1 2010 1.75 Q2 2010 1.84 15% Q3 2010 1.81 10% 5% 0% 9.6% .9.5% 8.4% 9.8% 7.7% 8.6% 7.0% 5.9% 5.2% 4.8% 4.6% 3.6% 18.4% 17.3% 15.9% 1_3935 O VARES RAME BANK OF GEORGIA 000 56.30 TBC BANK ProCredit Bank BANK REPUBLIC HOTLED HONORGES Бутв Other Banks Note: 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 Lobko BANK OF GEORGIA www.bog.ge/ir YE 2008 YE 2009 Sep-10 November 2010 Page 46#47GEL/US$ Peer group's market share in gross loans Period End 40% YE 2006 1.71 YE 2007 1.59 34.1% 35% 32.9% YE 2008 1.67 Q1 2009- 1.67 30% 31.8% Q2 2009=1.66 Q3 2009=1.68 25% YE 2009 1.69 Q1 2010 1.75 20% Q2 2010 1.84 Q3 2010 1.81 15% 10% 5% 0% Lobko BANK OF GEORGIA 23.7% 21.6% 20.7% 10.1% 9.5% 8.7% 10.2% 10.1% 7.6% 8.4% 6.4% 6.0% 5.2% 5.6% 3.6% A 0 56.30 3 35 BANK OF GEORGIA TBC BANK PC Bank BANK REPUBLIC Note: 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 www.bog.ge/ir 13.0% 12.2% 18.5% ■YE 2008 ■YE 2009 Sep-10 Бутв Other Banks November 2010 Page 47#48GEL/US$ Peer group's market share in deposits 35% Period End YE 2006 1.71 29.4% 30% 28.8% YE 2007 1.59 27.4% YE 2008 1.67 25% Q1 2009- 1.67 24.1%23.7% 22.5% Q2 2009 1.66 Q3 2009=1.68 20% YE 2009 1.69 Q1 2010 1.75 15% Q2 2010 1.84 11.5% Q3 2010 1.81 10.8% 10% 8.9% 9.1% 8.5% 8.1% 5% 6.5% 6.8% 5.5% 3.6% 2.7% 2.0% 21.3% 20.4% 18.5% 0% 813-61355-5 G-LAST DANK OF GEORGIA 000 56.30 TBC BANK BANK REPUBLIC CARTUBAHE SVTB Other Banks ProCredit Bank HORT LUGO HONORES Note: 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 Lobko BANK OF GEORGIA www.bog.ge/ir ■YE 2008 ■YE 2009 ■Sep-10 November 2010 Page 48#49Caution Regarding Forward-Looking Statements This presentation contains statements that constitute "forward-looking statements", including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macroeconomic, governmental, legislative and regulatory trends, (2) movements in local and international currency exchange rates, interest rates and securities markets, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties and developments in the markets in which they operate, (6) management changes and changes to our group structure and (7) other key factors that we have indicated could adversely affect our business and financial performance, which are contained elsewhere in this presentation and in our past and future filings and reports, including those filed with the NSCG. We are under no obligation (and expressly disclaim any such obligations) to update or alter our forward-looking statements whether as a result of new information, future events, or otherwise. Lobko BANK OF GEORGIA www.bog.ge/ir November 2010 Page 49#50Contact Irakli Gilauri Chief Executive Officer +995 32 444 109 [email protected] Lobko BANK OF GEORGIA www.bog.ge/ir Macca Ekizashvili Head of Investor Relations Head of Representative Office, London 84 Brook St, London, W1K 5EH +44 203 178 4052 [email protected] November 2010 Page 50