JSC Bank of Georgia investor presentation April 2010 Introduction - - PowerPoint PPT Presentation

April 2010

GROWTH AT THE RIGHT PRICE

LSE: BGEO / GSE:GEB

JSC Bank of Georgia investor presentation

April 2010

Page 2

Introduction to Bank of Georgia

The leading universal bank in Georgia

No.1 by assets (33.0%) (1), loans (31.8%) (1) , client deposits (28.3%) (1) and equity (38.6%) (1) Assets of GEL 2.9 bn, Net Loans of GEL 1.7 bn, Client Deposits of GEL 1.3 bn and Equity of GEL 594.3 million Leading retail banking, with top brand, best distribution network and broadest range of services of any bank in Georgia

December 2009 September 2009 December 2008 Number of Retail Clients 730,800+ 700,000+ 666,000+ Retail Accounts 999,000+ 895,000+ 866,000+ Cards Outstanding 537,000+ 569,000+ 639,000+ Branches 141 140 151 ATMs 382 394 416

Leading corporate bank with approximately 82,000 legal entities and over 153,000 current accounts Leading card-processing, leasing, insurance, wealth management and brokerage services provider Banking operations in Ukraine and Belarus, with BG Bank (Ukraine) and BNB (Belarus) accounting 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’ – at the sovereign ceiling Fitch Ratings: ‘B/B’ Moody’s: ‘B3/NP (FC)’ & ‘Ba3/NP (LC)’ Listed on the London Stock Exchange (GDRs) and Georgian Stock Exchange Market Cap (LSE) US$ 396 mln as of 14 April 2010 Approximately 95% free float Issue of the first ever Eurobonds in Georgia Bloomberg: BKGEO; 5 year, 9%, US$200 mln B/Ba2/B (composite B+)

(1) All data according to the NBG as of 31 December 2009

Management & Employees**, 6.2% Institutional Shareholders*, 91.3% Local Shares Held by Domestic and Foreign Retail Shareholders, 2.5%

Ownership Structure

* 5.8% of total shares outstanding held in local shares ** Includes GDRs held as part of EECP

April 2010

The Georgian Economy

April 2010

Page 4

Georgia’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 (2009F): US$12.3 billion GDP real growth rate 2009A: -3.9% GDP real growth rate 2010F: 2% GDP per capita 2009A (market): US$ 2,450 GDP per capita 2009F (PPP): US$ 4,747 Current account deficit 2009F: US$ 1.6bn, 12.8% of GDP Budget Deficit 2009E: 9.5% of GDP Budget Deficit 2010F: 7.3 % of GDP Inflation rate (October, 12-month rate) 2009: 3.2% External public debt / GDP 2009E: 27% Sovereign ratings: Fitch B+/Stable S&P B/B

White White Stream Stream (proposed) (proposed)

April 2010

• Agricultural product exports of US$282m in 2009
• Ferroalloy exports of US$426m in 2008
• Aircraft, rail car, vessels and vehicles exports of US$122m

in 2008 and US$107m in 2009

• Fertilizers exports of US$105m in 2008 and US$60m 2009
• Machinery exports of US$29m in 2008 and US$30m in

2009

• Oil and gas pipelines

– Russia-Georgia-Armenia pipeline – 5.8 bcm/year – Shah-Deniz (BTE) gas pipeline - 6.6 bcm/year – Iran-Azerbaijan-Georgia (IAG) gas pipeline – 3.5 bcm/year – Baku-Supsa oil pipeline – 5.75 mt/year – Baku-Tbilisi-Ceyhan (BTC) oil pipeline - 50 mt/year

• Huge untapped hydro-power resources – only 18% of

Georgia’s hydro potential is being utilized; current export capacity of c. 150 MW

• Consumer spending in 2008 - US$3.8bn

– estimated average household size of 3.7, far higher than in most CEE/CIS peers – new construction has not caught up with the cumulative deterioration of the Soviet-built housing stock – less than 18,000 households (out of the estimated total of 1.3 million) have mortgages

• Consumer debt per capita (including mortgages) stood

at US$92 as of 31 December 2009

• Organized retail trade (supermarkets, hypermarkets,

consumer electronics & white goods, etc) account for a low share of total

• Debt /GDP under 30%; Retail loans/GDP under 10%

Economic growth is supported by § FDI expected at US$0.8 bn in 2010 § Free industrial zones created around Poti (port), Kutaisi (second largest city) etc. (Tax rates in zones largely 0%) § Net transfers from abroad § Increasing consumer spending § Sustained government spending

Source: Ministry of Economic Development, Ministry of Finance, National Statistics Office of Georgia

Key drivers of economic growth

Export-led growth with sufficient diversity Increasing domestic consumption

Page 5

April 2010

Page 6

Source: National Bank of Georgia

GDP Breakdown, 2009

GDP breakdown: trade, logistics, services

Agriculture, hunting and forestry; fishing, 8.3% Mining and quarrying, 0.6% Manufacturing, 7.3% Utilities & household processing, 5.3% Construction, 5.3% Trade (Retail & Wholesale), 12.4% Hotels and restaurants, 2.0% Transport & Communication, 10.6% Financial intermediation, 2.5% Real estate, renting and business activities, 3.5% Public administration, 13.7% Education, 4.2% Health, social and community work, 5.6%

April 2010

Page 7

Libertarian economic policies kick-start modernization

Tax and tax rates slashed Now only 6 taxes, down from 21 Flat personal income tax of 20% (to come down to 15% by 2013) Corporate income tax 15% By 2012, no taxes on dividends, interest income, or world-wide income “Liberty Act”: Referendum is required for an increase in tax rates Budget expenditure capped at 30% of GDP, effective FY 2012 Budget deficit capped at 3% of GDP, effective FY2012 Public debt capped at 60% of GDP, effective FY2012 Budget earmarks are limited Red tape and import duties cut Customs code harmonized with EU. Customs procedures reduced from 15 to 7 Capital controls abolished since 1990s Corruption significantly reduced In the World Bank’s Ease of Doing Business survey in 2009 Georgia was 11th (out of 183), from 112th in 2005 In the 2009 Transparency International Corruption Index Georgia was 66th (4.1 score), just below Turkey (61st, 4.4), the same as Croatia and above Brazil (75th, 3.7), China (79th, 3.6), India (84th, 3.4) and Russia & Ukraine (146th= 2.2) According to the International Republican Institute survey, 98% of Georgians didn’t have to pay a bribe in the past 12 months In Forbes Tax Misery & Reform Index, Georgia was 4th best behind Hong Kong, UAE & Qatar Ambition: Create a fast-growing free enterprise economy that attracts investment and become regional logistical and banking hub

April 2010

Page 8

GDP per capita is low, leaving much room to climb

GDP per capita across countries

Source: IMF, National Bank of Georgia US$

2,555 2,641 2,737 2,921 2,984 3,012

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Bulgaria 2003 Turkey 2002 Romania 2003 Georgia 2008 Russia 2003 Serbia 2004 US$ 2,520 2,450 3,850 5,190 7,770 8,230 10,580 12,530 13,980 39,000

• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Ukraine Georgia China Belarus Romania Russia Poland Hungary Estonia Western Europe average (EU 15+)

April 2010

Page 9

Strong economic growth before crisis … starting again?

GDP per capita Gross domestic product (GDP)

Source: National Statistics Office of Georgia

4.0 5.1 6.4 7.8 10.2 12.8 10.7 11.0 11.1% 5.9% 9.6% 9.4% 12.3% 2% 2.1%

• 3.9%
• 2

2 4 6 8 10 12 14 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010F

USD billion

• 5%
• 3%
• 1%

1% 3% 5% 7% 9% 11% 13% 15% Nominal GDP (LHS) Real GDP Growth (RHS) 2920 4900 919 1,188 1,484 1,764 2,315 2,921 2,450 2,966 3,242 3,644 4,038 4,664 4,863 4,747 1,000 2,000 3,000 4,000 5,000 6,000 2003 2004 2005 2006 2007 2008 2009 2010F

USD

Nominal GDP per capita GDP per capita PPP

April 2010

US $ mln 98.3 261.7 942.0 1,092.6 2,971.6 1,261.5 276.2 176.7 160.3 342.4 389.4 1,240.6 2,043.8 682.8 (353.5) (383.3) (1,174.6) (1,274.3) (709.2) (2,915.3) (2,009.1)

2.6% 2.9% 2.3% 4.2%

• 6.9%
• 19.7%
• 9.6%
• 22.8%
• 15.1%
• 11.1%
• 11.9%

7.8% 3.1% 10.1%

• 4,000
• 3,000
• 2,000
• 1,000

1,000 2,000 3,000 4,000 5,000

• 25.0%
• 20.0%
• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0%

Donor inflows (DI) Total private capital inflows (TPCI) CAD CAD as % of GDP CAD+TPCI+DI as % of GDP

2009 2008 2007 2006 2005 2004 2003 Page 10

Current Account Deficit

Current Account Deficit Exports and Imports*

*Export and Import of goods and services Source: Central Bank of Georgia 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, Minister of Finance of Georgia

US$ mln 1,865.3 2,492.8 3,317.9 4,412.9 5,916.9 7,499.0 5,266.8 3,199.2 2,551.6 2,187.5 1,288.5 3,182.4 3,688.4 1,646.9 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2003 2004 2005 2006 2007 2008 2009

Remittances Exports of goods & services CAGR ('04-09): 14% Imports of goods & services CAGR ('04-'09): 16% 165.8 212.7 315.4 420.5 755.4 917.9 766.5

April 2010

US$ 2.11 bn US$1.48 bn US$0.93 bn US$ 1.36 bn US$0.19 bn US$0.49 bn US$0.38 bn US$ 2,20 bn 1.9 1.3 1.0 1.1 0.8 0.8 0.8 1.8 500 1000 1500 2000 2500 2003 2004 2005 2006 2007 2008 2009 Mar '10 0.0 0.5 1.0 1.5 2.0 2.5 Fx reserves FX/M2 Page 11

…so FX reserves rose, while inflows funded investment

NBG Interventions FX reserves, $ mln

Source: National Bank of Georgia, Ministry of Finance of Georgia

Inflation

2003-2009 CAGR =48.6%

156.7 124.0 (42.9) (341.2) (182.7) (660.8) 432.4 (800.0) (600.0) (400.0) (200.0) 0.0 200.0 400.0 600.0 2004 2005 2006 2007 2008 2009 Mar '10 0.0 0.5 1.0 1.5 2.0 2.5 NBG Interventions Average Lari/US$

Record high for Georgia

20 40 60 80 100 120 140 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

• 4
• 2

2 4 6 8 10 12 14 16 Real effective rate, Jan05=100 (LHS) CPI (e-o-p) CPI (average) 103.3 113.5 103.8 103.2 109.8 8.2% 1.7% 10.0% 9.2% 9.2% 6.2% 3.0% 5.5% 11.0% 8.8%

April 2010

Page 12

FDI picking up again…

Cumulative net FDI breakdown by origin FDI Inflows Quarterly FDI inflows FDI breakdown by sectors, 2009

2004- 2009 Country US$ ‘000s % UK 743,438 11.9% UAE 583,076 9.4% USA 484,902 7.8% Turkey 515,407 8.3% Netherlands 500,328 8.0% British Virgin Islands 416,323 6.7% Kazakhstan 307,651 4.9% Czech Republic 290,804 4.7% Cyprus 296,459 4.8% Subtotal 4,138,387 66.5% Other countries 2,084,856 33.5% Total 6,223,243 100.0%

223.6 253.9 151.8 129.8 286.2 134.7 605.4 537.7 702.9 489.1 401.5 421.4 456.7 280.7 306.9 146.0 178.9 75.6 105.9 89.4 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 US$ mln

Banking system, 6.0% Other, 1.3% Industry, 26.9% Hotels & Restaurants, 17.7% Real estate, 17.4% Construction, 10.5% Transports and Communications, 20.2%

499.1 449.8 1,190.4 2,014.8 1,564.0 759.1 800 9.7% 7.0% 15.3% 19.8% 12.2% 7.1% 7.3% 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 2004 2005 2006 2007 2008 2009 2010F US$ mln 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Net FDI Net FDI as % of GDP Source: National Statistics Office of Georgia

April 2010

Page 13

Net remittances

Cumulative net remittances, 2004 – 2009 Net remittances by countries, 2009 Net remittances, 2004-2009 Cumulative net remittances by countries, 2004- 2009

Country US$ '000s % of total Russia 1,015,697 60.3% USA 126,199 7.5% Greece 104,117 6.2% Spain 39,469 2.3% Ukraine 109,517 6.5% Turkey 36,513 2.2% UK 11,872 0.7% Israel 15,761 0.9% Kazakhstan 16,306 1.0% Germany 12,601 0.7% Other countries 196,299 11.7% Total 1,684,352 100.0%

Source: National Bank of Georgia, National Statistics Office of Georgia

USA, 8.5% Greece, 7.7% Spain, 2.7% Ukraine, 6.9% Turkey, 2.7% UK, 0.7% Israel, 1.1% Kazakhstan, 0.9% Other countries, 13.4% Russia, 54.5% Germany, 1.1%

USA, 7.5% Greece, 6.2% Spain, 2.3% Ukraine, 6.5% Turkey, 2.2% UK, 0.7% Israel, 0.9% Kazakhstan, 1.0% Germany, 0.7% Russia, 60.3% Other countries, 11.7%

212.7 315.4 420.5 755.4 917.9 766.5 4.2% 4.9% 5.4% 7.4% 7.2% 7.2% 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1000.0 2004A 2005A 2006A 2007A 2008A 2009 US$ mln 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Net remittances (LHS) Net remittances as % of GDP (RHS)

April 2010

Page 14

…and more donor money to continue to flow

500 kv. power transmission line (EBRD, EIB, KfW) East-West highway improvement project (WB, Japan) Adjara bypass road (ADB) Vaziani-Gombori-Telavi road (WB) South Georgia road (MCG) Secondary and local roads (WB) Rehabilitation of infrastructure facilities in Batumi (KfW) Regional and municipal infrastructure development projects (ADB, EBRD)

Source: Ministry of Finance of Georgia

Financial institutions &

• rganizations,

53.7% US$2,438 mln United States, 22.0% US$1,000 mln European Community, 14.1% US$638 mln Japan, 4.4% US$200 mln EU member states, 3.8% US$173 mln Norway, 0.9% US$40 mln Switzerland, 0.4% US$19 mln Other, 0.6% US$29 mln EBRD, 20.4% US$926.84 mln World Bank, 11.7% US$ 530 mln IFC, 7.7% US$350 mln European Investment Bank, 7.3% US$329.6 mln Asian Development Bank, 6.6% US$ 300 mln CoEB, 0.03% US$1.32 mln

Total pledged funds (October 2008): US$4.5 bn

As of YE 2009 over US$1 bn disbursed

IMF’s Stand-By arrangement (September 2008): US$750 mln

In addition… Approved access to US$1,189 million under SBA by IMF until June 2011 (August 2009) The U.S. committed US$124 million investment in energy infrastructure development (February 2010) US$70 million from ADB for infrastructure repairs in 2009

April 2010

Page 15

Fiscal indicators: The worst seems past

Overall fiscal balance of the state budget, 2004-2009F Fiscal revenue performance

• 815.7
• 1,258.6
• 1,720.5
• 1,390.1
• 935.7
• 468.9
• 4.5%
• 3.4%
• 4.8%
• 6.6%
• 7.3%
• 9.4%
• 2,000.0
• 1,600.0
• 1,200.0
• 800.0
• 400.0

0.0 2006 2007 2008 2009F 2010F 2011F GEL mln

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% Overall fiscal balance Overall fiscal balance as % of GDP

305.5 379.5 308.4 377.9 358.4 352.2 390.5 346.3 362.5 502.6 319.6 415.3 408.1 367.1 266.0 314.6 316.8 293.0 352.1 373.0 328.2 263.2 444.3 316.2 303.5 407.6 442.5 499.5 459.2 447.3 366.8 266.4 320.4 573.2 334.9 446.2 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 January February March April May June July August September October November December

GEL mln

2007 2008 2009

Source: National Bank of Georgia, National Statistics Office of Georgia

April 2010

Page 16

Public debt

External public debt service Breakdown of public debt Public debt as % of GDP, 2009

Georgia’s economy is quite unleveraged compared to other emerging market economies Georgia’s public debt is 35.6% of GDP in 2009 down from 56% in 2003 Paris club rescheduling in 2001 and 2004 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

Source: “The Georgian Economy Overview”, Government of Georgia Presentation, Source: “The Georgian Economy Overview”, Government of Georgia Presentation, June 2009. Source: World Bank, International Monetary Fund

103.8 110.6 152.2 102.1 173.3 118.7 8.8% 7.1% 7.3% 2.9% 5.5% 3.4% 20 40 60 80 100 120 140 160 180 200 2004A 2005A 2006A 2007A 2008A 2009F US$ mln 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% External debt service External debt service as % of budget revenue

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Czech Republic Estonia Hungary Kazakhstan Latvia Poland Georgia Slovak Republic Lithuania Ukraine Bulgaria Turkey Russia

1.86 1.73 1.7 1.79 2.48 3.38 0.83 0.85 0.85 0.89 0.97 1.0 40.4% 32.6% 41.1% 28.7% 52.7% 26.3% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2004A 2005A 2006A 2007A 2008A 2009A US$ billion 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% External public debt Internal public debt Total public debt as % of GDP

April 2010

Page 17

Source: National Statistics Office of Georgia

Page 17

WTO member since 2000 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, granting local companies the right to export 7,200 categories of goods duty-free As of November 2007 Georgia has entered into a free trade agreement with Turkey US-Georgia charter on strategic partnership envisions an update of Bilateral Investment Treaty, expansion of Georgian access to the General System of Preferences and the possibility of entry into Free Trade Agreement

Import structure by country, 2009 Import structure by product, 2009 Export structure by country, 2009 Export structure by product, 2009

Trade structure

Ukraine, 7.4% Armenia, 7.8% USA, 3.3% Russia, 1.9% Azerbaijan, 16.3% Canada, 10.4% Kazakhstan, 1.8% United Arab Emirates, 1.5% China, 0.5% Other, 10.0% Turkey, 19.9% EU Countries, 20.9% Ores, 5.9% Ferrous Metals, 17.4% Vehicles, 7.4% Beverages, Spirits & Vinegar, 10.9% Gems & Precious Stones, 10.4% Equipment & Rail Cars, 4.0% Oil & Gas, 3.9% Pharmaceuticals, 1.3% Vessels & Aircraft, 2.0% Sugar, 0.1% Others, 28.3% Fertilizers, 5.3% Cement, 2.1%

United Arab Emirates, 2.5% USA, 5.2% EU Countries, 29.9% Turkey, 18.0% Azerbaijan, 12.1% Ukraine, 9.6% Russia, 6.6% China, 4.0% Turkmenistan, 2.8% Armenia, 0.9% Kazakhstan, 0.5% Others, 12.4% Paper, 2.0% Sugar, 1.4% Mechanical Equipment & Electrical Machinery, 20.1% Mechanical Equipment & Electrical Machinery, 17.5% Vehicles, 7.8% Ferrous Metals, 1.9% Apparel & footwear, 3.2% Pharmaceuticals, 4.4% Cereals, 4.0% Plastic, 3.0% Ferrous Metal Products, 2.2% Others, 36.5%

April 2010

Management target for 2010

April 2010

Page 19

Targeted financial performance 2010

Target net provision expense for 2010 Assumptions Target pre-provision profit for 2010

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

50.0 130.4 128.7 17.0 40 80 120 160 2007 2008 2009 2010F

GEL mln * IMF Estimates

Target net income for 2010

75.6 0.2 (99.0) 72.3 (100.0) (80.0) (60.0) (40.0) (20.0)

• 20.0

40.0 60.0 80.0 100.0 2007 2008 2009 2010F

GEL mln

68.02 21.85 13.03 5.73 135.0 27.0 127.9 106.8 40 80 120 160 2007 2008 2009 2010F

GEL mln

Profit before provisions Goodwill Impairment associated with BG Bank Losses related to Real Estate Losses related to investments Other 135.6

April 2010

Strategy

April 2010

Page 21

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

Page 21

Strategic objectives: grow at the right price

Wealth Management services launched in Israel and Ukraine Deposits from international clients reach GEL 100 mln in ’09, c. 8% of total deposits Premier Banking launched for the affluent client base supported by the exclusivity of Amex Card issuing and acquiring business in Georgia

More efficient Deposit funding Lending machine International operations, Divesting of non-core assets

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% Lending rates decreased from 16-18% to 14.5-16.5% as lending stepped up to top borrowers in Georgia Emphasis on micro loans, SMEs, consumer loans and mortgages in Georgia Scale down operations of BG Bank; leverage on corporate banking and brokerage to build trade finance business in Ukraine to capture growing (c.U$1 bn) trade between Georgia and Ukraine Focus on high margin, unattended SME sector in Belarus; explore the possibility of third party investor, such as IFIs, in BNB First stage of restructuring of equity investment business completed Controlling stake in investment management company sold in Oct ‘09

Challenges in 2010: Cost control combined with Loan book growth

April 2010

Intention to pay dividends

April 2010

Page 23

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

• utlined 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

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

Page 23

# of Shares outstanding

Intention to pay dividends for 2010

25,202,009 27,154,918 31,252,553 31,306,071 YE 2006 YE 2007 YE 2008 YE 2009

April 2010

Governance

April 2010

Page 25

25 25

• 7 non-executive SB members; non-executive Chairman

Supervisory Board SB members

• Nicholas Enukidze, Chairman

experience: MD at Concorde, Ukrainian investment bank; ABN AMRO Corporate finance in Moscow and London, Global One Communications,

• VA. USA
• 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,Advisor to SB, to replace Irakli Gilauri as

SB member subject to the next AGM

experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs

• Chief Executive Officer and 8 Deputies

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
• f 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, COO; 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
• f the Investment Risk Unit and Senior Investment Manager at Pictet Asset

Management in London and Geneva. MS in Finance from London Business School

Page 25

A move to classical two-tier board structure

April 2010

FY 2009 and Q4 2009 results highlights

April 2010

Page 27

Assets

Corporate loan book breakdown, BoG Standalone Loan book Total assets Retail loan book breakdown, BoG Standalone

Total assets declined by 9.8% in 2009 Gross loans declined by 14.9% in 2009 Gross loans grew 1.7% q-o-q in Q4 09 Standalone Gross loans grew 5.2% q-o-q in Q4 2009 Liquid funds increased by GEL 180 mln, 35%, to GEL 700 mln in 2009 GEL 360 mlm of excess liquidity at YE 2009 Goodwill of GEL 70 mln written-off in Q4 2009, of which GEL 68 mln associated with Ukraine

1,855.7 2,106.7 2,059.7 2,189.4 2,046.8 1,904.7 1,833.1 1,864.2 2,938.4 2,980.2 2,907.8 3,186.8 3,258.9 3,154.3 3,400.7 3,147.7 1,000 2,000 3,000 4,000 5,000 6,000 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln Gross loans

87% of total loan book collateralized 81% of total retail loan book collateralized 87% of total corporate loan book collateralized

Pharmaceuticals and Healthcare, 2% Industry & State, 12% Real Estate, 9% Other, 14% FMCG, 9% Construction , 8% Trade, 32% Energy, 9%

98% Collaterilized 66% Collaterilized 100% Collaterilized 100% Collaterilized 93% Collaterilized 98% Collaterilized

Consumer and

• ther, 29%

Mortgage loans, 43% Micro loans, 12% Credit cards and

• verdrafts, 16%

100% Collaterilized 89% Collaterilized 0% Collaterilized 100% Collaterilized

BNB, 1% CB, 47% RB & WM, 46% BG Bank, 10%

93% Collaterilized 81% Collaterilized 89% Collaterilized

April 2010

Page 28

Loan portfolio quality

NPLs, BoG Standalone NPLs Consolidated Loan quality under the following stress tests Loan loss reserve, Consolidated

GEL mln

183.3 173.7 155.1 135.2 108.8 129.0 44.4 39.6 9.8% 8.1% 6.6% 5.0% 6.3% 2.1% 2.1% 9.5% 7.5% 1.5% 7.8% 5.1% 2.9% 1.1% 1.0% 7.6% 20 40 60 80 100 120 140 160 180 200 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 0% 2% 4% 6% 8% 10% 12% Loan loss reserves Reserve For Loan Losses To Gross Loans, BoG Consolidated Consolidated NPLs to Gross Loans, BoG Consolidated

GEL mln

19.0 32.1 23.3 64.3 104.6 148.8 139.8 140.0 7.0% 1.2% 1.7% 1.3% 3.2% 4.7% 6.9% 6.4% 7.5% 1.9% 6.8% 4.9% 5.5% 6.7% 2.0% 7.5% 20 40 60 80 100 120 140 160 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 0% 1% 2% 3% 4% 5% 6% 7% 8% NPLs % of Gross loans Loan loss reserve as % of gross loans

8.1 9.7 12.0 22.7 35.9 10.9 11.3 61.4 75.4 0.0 17.2 30.1 23.9 28.6 67.4 46.3 54.5 51.3 41.1 41.6 22.4 208.4% 554.4% 131.0% 169.1% 124.2% 129.3% 104.2% 138.3%

• 20

20 40 60 80 100 120 140 160 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

GEL mln

0% 100% 200% 300% 400% 500% 600% RB &WM CB Other* NPL coverage ratio

Armed conflict with Russia in August 2008 17% devaluation of Lari against US$ in one day in November 2008 Political crisis in Georgia peak in Spring 2009

* Other NPLs include BNB and BG Bank

April 2010

Page 29

Liabilities

Borrowed funds Client deposits Retail banking deposits

Total Client deposits grew by 7% in 2009 WM client deposits grew 68.6% in 2009 (24.1% q-o-q in Q4 ‘09) RB client deposits grew 19.3% in 2009 (14.9% q-o- q in Q4 2009) CB client deposits declined 6.7% in 2009 (1.2% q-o-q in Q4 2009) GEL 225 of Borrowed funds repaid in 2009, resulting in 20% decrease y-o-y GEL 100 mln decline in Shareholders’ equity in 2009 due to 2009 loss associated with Ukraine, mark- downs of real estate and investment

Wealth Management deposits

363.6 403.4 326.0 319.0 280.4 285.0 331.2 380.5 652.7 681.5 576.2 626.7 605.2 519.0 594.9 587.6

• 100

600 1,300 2,000 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

RB Client Deposits CB Client Deposits WM Client Deposits Other 1,326 1,395 1,202 1,193 1,133 1,025 1,183 1,277 380.5 331.2 285.0 280.4 319.0 326.0 403.4 363.6 100 200 300 400 500 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

913.0 918.6 1,011.4 1,162.8 1,137.8 947.8 903.6 795.1 500 1000 1500 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

76.5 81.6 70.4 96.7 93.3 105.2 131.4 163.1

• 20.0

40.0 60.0 80.0 100.0 120.0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

+68.6%

• 19.8%

+19.3%

April 2010

Page 30

Equity & Capital adequacy

BIS capital adequacy ratios, BoG Consolidated NBG capital adequacy ratios, BoG Standalone Total Shareholder’s equity Share price performance

25.2% 25.0% 23.9% 22.2% 25.4% 22.2% 22.5% 24.7% 34.6% 34.2% 31.7% 27.3% 25.3% 25.8% 25.8% 33.7% 0% 5% 10% 15% 20% 25% 30% 35% 40% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio 18.3% 15.8% 18.2% 16.6% 16.4% 17.8% 20.4% 19.7% 16.3% 16.8% 15.1% 15.5% 13.5% 17.4% 18.4% 21.2% 0% 5% 10% 15% 20% 25% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio

2009 BV/share US$11.3

594.3 718.5 709.9 711.8 718.8 739.3 783.0 746.7 500 750 1000 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

0.00 2.00 4.00 6.00 8.00 10.00 12.00 1-Jan-09 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

US$

Risk weighting of FX denominated assets at 150% according to the National Bank of Georgia standards

April 2010

Page 31

Despite consolidated gross loan book contraction by 14.9% y-o-y in 2009 net interest income declined by 5%. Interest expense was largely flat. In Q4 2009 Total operating Income/Revenu e was GEL 79.5 mln (+0.2% q-o-q) In 2009 Total

• perating

Income/Revenu e was GEL 321.1 mln (-5.4% y-o-y) Georgia accounts for 91.1% of total consolidated revenues, BG Bank 6.3% and BNB 2.6%

Page 31

Revenue Revenue by segments

Revenue

BoG Standalone 78.8%, GEL 253.1 mln (-8.8% y-o-y) Ukraine 6.3% , GEL 20.1 mln (-35.8% y-o-y) Belarus 2.6%, GEL 8.4 mln (+74.2% y-o-y) Aldagi BCI 5.9%, GEL 18.9mln (+194.6% y-o-y) Other 6.4%, GEL 20.6 mln (+5.0% y-o-y) 49.8 55.8 58.9 56.4 52.4 49.5 48.9 48.4 31.3 30.3 27.1 30.2 29.3 31.1 30.4 31.1 10 20 30 40 50 60 70 80 90 100 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln Net Interest Income Net Non-Interest Income

81.1 79.5 79.3 80.6 81.7 86.6 85.9 86.1

Revenue, quarterly Composition of revenue Q4 2009

Net other non- interest income 14.3%, GEL 11.4 mln (+19.0% q-o-q) Net fee and commision income15.3%, GEL 12.2 mln (+1.1% q-o-q) Net foreign currency related income 6.6%, GEL 5.2 mln (-19.1% q-o-q) Net income from documentary

• perations

2.9%, GEL 2.3 mln (-0.7% q-o-q) Net interest income 60.9%, GEL 48.4 mln (-1.1% q-o-q)

GEL mln 38.8 66.7 130.2 220.8 199.2 24.7 45.3 89.2 118.7 121.9 50 100 150 200 250 300 350 400 2005 2006 2007 2008 2009

Net Interest Income Net Non Interest Income 63.4 321.1 339.5 219.5 112.0 +76.6%

• 8.3%

+95.9% +54.7%

• 4.5%

April 2010

1.4 1.9 1.7 1.4 2.3 1.8 2.3 2.3 1 1 2 2 3 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

Page 32

Revenue cont’d

Income from documentary operations Net foreign currency related income Net fee & commission income Other non-interest income

Net Foreign Currency related income decreased by 42.6% in 2009, due to the decline in trade activities in Georgia by c.30% & exceptionally high FX Income in Ukraine in Q4 08 Income from documentary

• perations

increased by 34.3 % in 2009 Net Other Non- Interest Income increased by 126% in 2009, mostly due to the increases in brokerage and insurance income

12.2 12.0 11.6 11.1 10.9 10.9 10.2 10.2 2 4 6 8 10 12 14 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln 6.5 5.2 7.1 8.8 14.9 9.4 10.4 13.2 2 4 6 8 10 12 14 16 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln 1.7 2.5 3.2 3.0 5.1 4.9 5.0 0.1 0.4 0.3 1.3 1.9 1.8 0.2 0.3

• 0.4
• 1.1

0.0 0.3

• 0.5

0.5 4.7 3.4 1.0 3.6 3.7 3.0 3.8 1.6 1.9 1.6 1.3 0.2 0.2

• 3.4
• 0.4

3.3

• 6
• 4
• 2

2 4 6 8 10 12 14 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln Net Insurance Income Brokerage Income Asset Management Income Realized Net Investment Gains Other

+62.1%

April 2010

Page 33 Page 33

Costs

Recurring operating costs Net non-recurring costs

33.3 75.6 104.4 90.3 41.8 86.5 92.7 23.2 15.3 30.2 50 100 150 200 250 2005 2006 2007 2008 2009

GEL mln Personel costs Other Recurring Operating Costs

190.9 117.4 63.5 38.5 182.9 821 824 836 842 786 757 707 617 621 2,692 3,056 3,619 3,853 2,741 2,692 2,665 2,669 2,674 4,459 4,926 5,911 6,196 4,977 4,964 4,914 4,798 4,781 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 BG Bank BoG Standalone Group Consolidated

Employees

25.7 27.3 28.4 23.1 22.0 23.2 22.3 22.8 18.7 21.6 21.3 24.8 22.7 23.1 22.6 24.2 10 20 30 40 50 60 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

Personnel Costs Other Recurring Operating Costs

44.5 48.9 49.7 47.9 44.7 46.3 45.0 47.0

Recurring operating costs

Total Recurring Operating costs decreased by 2.0 y-o-y in 2009 Non Net Non- Recurring Costs of GEL 108.6 mln driven by goodwill write- down associated with BG Bank (GEL68 mln) and mark down

• f real estate

and investments

• 4.7

(20.7)

• (68.0)

(5.7) (2.0) (21.9) (13.0)

• 120
• 100
• 80
• 60
• 40
• 20

20 2005 2006 2007 2008 2009

GEL mln Net Non-Recurring Income (Costs) Goodwill Impairment associated with BG Bank Losses related to Real Estate Losses related to investments Other

April 2010

Page 34

Operating profit, Provision expense

Net provision expense BoG Standalone Net provision expense BoG Consolidated Normalized net operating income Net provision expense BG Bank Standalone

Consolidated Net provision expenses improved by 8.0% q-o-q Bank of Georgia Standalone Net provision expenses declined by 1.9% q-o-q BG Bank’s Net provision expense improved by 37.2% q-o-q which drove

• verall

changes higher Net loss for Q4 2009 was GEL 102.4 mln. 2009 2009 Net loss was GEL 99.0 mln

17.4 17.7 29.6 24.0 (4.5) 103.9 8.6 6.7

• 40
• 20

20 40 60 80 100 120 140 160

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

27.6 30.0 40.7 32.1 10.9 103.2 7.2 7.5 20 40 60 80 100 120 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

0.4 (1.3) 0.5 18.2 9.3 11.0 13.0 8.1 (5) 5 10 15 20 25 30 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

32.5 34.3 37.1 38.7 36.3 37.1 36.6 34.3

29 30 31 32 33 34 35 36 37 38 39 40 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

Related to the armed conflict in August 2008

April 2010

Page 35

Profitability & selected ratios

Net loans/Client deposits Cost Income Ratio*

*Normalized for Total Non- recurring costs 9.2% 8.9% 9.1% 9.0% 9.1% 9.3% 10.1% 9.8% 8.9% 8.1% 9.6% 9.3% 10.0% 9.9% 9.8% 9.0% 8.6% 7.5% 0% 2% 4% 6% 8% 10% 12% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Net Interest Margin, Group Consolidated Net Interest Margin, BoG Standalone

Net interest margin (annualized) Net Income (Loss)

GEL mln 13.6 26.8 75.6 0.2 (99.0) (120) (100) (80) (60) (40) (20) 20 40 60 80 100 2005 2006 2007 2008 2009

131.7% 140.3% 170.6% 168.7% 174.4% 160.6% 147.8% 136.9% 0% 100% 200% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

GEL mln

53.5% 56.2% 57.0% 47.9% 44.5% 46.5% 44.9% 47.8% 47.2%

0% 20% 40% 60% 80%

2007 2008 2009 Cost/Income Ratio, Consolidated Cost/Income Ratio, Bank of Georgia Standalone Cash Cost/Income normalized, Consolidated

April 2010

Page 36

Operating environment in Georgia is improving and 2010 looks promising for Bank

• f Georgia:

NPLs stabilized – 0.1% q-o-q decrease in Q4 2009; Prudently provisioned loan book with NPL coverage ratio of 131% Consumer confidence and economic activity is increasing with a 16% increase in client deposits in Q3 2009 and 8% q-o-q increase in client deposits in Q4 2009 National Bank of Georgia has highest FX reserves in Georgia’s history – US$2+ bn, a 56% increase in FX reserves YTD A 12% y-o-y growth of VAT, a highly correlated measure to GDP, in January, suggests a healthy economic growth trend, that may result in higher than estimated 2% growth of 2010 GDP We came out strong from the downturn and are well positioned to take advantage of

• ur high liquidity and strong capital to achieve growth at the right price….

…..by implementing our strategy to become more efficient, deposit funded lending machine

Page 36

Summary

April 2010

Page 37 Page 37

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,

• bligors 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.

Caution Regarding Forward-Looking Statements

April 2010

Page 38

Contact

Irakli Gilauri Chief Executive Officer +995 32 444 109 igilauri@bog.ge Macca Ekizashvili Head of Investor Relations +995 32 444 256 ir@bog.ge