2

CB-MSME Loans / GDP, %

13.5%

16.8% 17.4% 16.6% 17.4% 17.7% 18.2%20.1%

21.8%23.9% 23.3%

0%

5%

10%

15%

20%

25%

30%

0%

5%

10%

15%

20%

25%

30%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9M16

• Georgian CB/MSME loans to GDP at 23.3%

Source: NBG, GeoStat

(2014→9M’2016)

• 25.01% GEL vs. USD devaluation

• BOG response was cautious, absorbing effects of devaluation risk

• Sluggish GDP growth

• Increasing efforts to deconcentrate CB portfolio

CB Real Gross Portfolio (2010 ex. rates)CB Nominal Gross Portfolio

3

→

1,262 1,448

1,774 1,910

2,232 2,250 2,196

-

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014 2015 Sep-2016

GEL

mill

ion

s

GEL

mill

ion

s

1,262

1,522

1,876 1,943 2,139

1,728 1,756

6.3%7.2%

6.4%

3.4% 4.6%2.8% 2.6%

4-5%

0.0%

5.0%

10.0%

15.0%

-

500

1,000

1,500

2,000

2,500

Loan Portfolio w/o FX Effect GDP Real Growth rate

• Corporates have digested high leverage – 18.1% real drop over last 2 years (2014→9M’2016)

• Going forward:

• Positive GDP growth outlook: short term: 4 - 5%; medium-to-long term: 5 - 6%

• Implementing Estonian Model, releases ~500-600mln GEL free cash for corporate businesses (~10-15%growth prospect for banking sector)

• Resulting:

• Estimated 10%+ p.a. loan book growth over the next 3 years

Source: CB Standalone, NBG

Market Share - Loans To Legal EntitiesCIB Net Income & ROE

4

GEL

mill

ion

s

CIB Deposit PortfolioCIB Loan Portfolio

GEL

mill

ion

s

GEL

mill

ion

s

57 47 70

78 71 69

101 15.3%

13.7%

18.5%17.5%

0.0%

5.0%

10.0%

15.0%

20.0%

-

20

40

60

80

100

120

140

2013 2014 2015 2016 (9m)

9M Profit Y Net Income ROE

36.3% 35.9%

31.7%29.5%

10.0%

20.0%

30.0%

40.0%

50.0%

2013 2014 2015 2016 (9m)

1,924

2,251 2,331 2,217

-

500

1,000

1,500

2,000

2,500

2013 2014 2015 2016 (9m)

1,901 1,991

2,871 2,580

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 2015 2016 (9m)

*Consolidated CIB includes Corporate Banking, WM, WM Rep. Offices, GLC & G&T

• CIB consolidated ROE currently stands at 17.5%

116.7 107.9

25.6 19.8

27.8 32.5

5.8 7.7

175.8 167.9

-

50.0

100.0

150.0

200.0

2015 (9m) 2016 (9m)

Net other banking income Net banking foreign currency gain

Net fee and commission income Net banking interest income

GEL

mill

ion

s

CIB Revenue Breakdown

5

GEL

mill

ion

s

CIB Net Fee & Commissions

• Net fee and commission income decreased

by 22.4% Y-o-Y

• FX income remains relatively stable despite

contraction of overall operations’ volume

• Drop in the net fee and commission income

was mainly attributable to contraction of

documentary business (-27.5% Y-o-Y), due

to:

• Being cautious on infrastructure

financing

• Eliminating business related to high

risk clients

• Major shift in government

infrastructural spending towards SME

sector

16.8

12.2

8.8

7.7

25.6

19.8

-

4.0

8.0

12.0

16.0

20.0

24.0

28.0

2015 (9m) 2016 (9m)

Net fees - Guarantees and LCs

Net fee and commission income

Manufacturing

26.3%

Trade

13.3%

Real estate

9.6%Service

8.2%

Hospitality

6.3%

Transport &

Communication

5.1%

Electricity, gas

and water

supply

1.8%

Construction

8.3%

Financial

intermediation

3.7%

Mining and

quarrying

4.5%

Health and

social work

3.1%

Other

9.6%

Top 10 Clients as a % of Total Loan Book

6

CIB Loan Book

• During 2010-2015, we engaged in big positions with large, single clients

• This delivered high profitability but resulted in large exposure to top clients

• We are currently targeting reduction of top 10 concentration to 9.0%-10.0%

New target of

<10.0 %

30 September 2016

CIB standalone

16.8% 16.6%

15.7%

12.7%

11.9%

10%

20%

2012 2013 2014 2015 Sep-2016

Top 10 Concentration:

7

Resume loan portfolio growth

Reduce concentration risk

• Limit maximum exposures

• Syndicate large exposures

Growth of fee business

2

3

1

8

GEL

mill

ion

s

CB Top 10 Client Concentration

5,237

704

5,941

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Sep-16

CB Top 10 Clients

Total Banking Business Loan Book

11.9%

Syndication and de-concentration partnerships

IFIs Foreign Banks Local Banks Bonds

• EBRD • Credit Suisse • TBC • BOG WM

• IFC • Isbank • Pasha Bank

• FMO • Pasha Bank • Isbank

• EIB • Basis Bank

• DEG • VTB Bank

• Proparco

• More in depth sector analysis in cooperation with G&T

• Try to synchronize clients accounting system with I-

banking platform, thus receiving client information on a

regular basis

• Launching Moody’s risk management and scoring

software

• Knowing better cyclical sectors

• Better “Probability of Default” measurement

• Industry benchmarking

2

…resulted in increase of bonds related products in WM portfolio

9

Decreased cost of funds rates…

5.28%

6.55%6.00%

7.67%

4.66%

7.90%

2%

3%

4%

5%

6%

7%

8%

9%

2016 (9m)201520142013

CB RB WM

• Significant existing demand for higher yield products, creatingpotential for further bond issues

GEL

mill

ion

s

0

200

400

600

800

1,000

1,200

1,400

1,600

2010 2011 2012 2013 2014 2015 2016 (9m)

Curren&Demand Term CD Clearable CD Local & Intl Securities Global Notes

Local&Intl Securities – 15%

Share of AUM, 9M 2016

Clearable CD –2%

CD – 46%

Term – 11%

Current & Demand – 20%

Global Notes – 6%

1 2

fueled regional fixed income coverage and…3

• Broker-dealer service to hard-to-reach CIS frontier markets, such as: Georgia, Armenia, Azerbaijan, Ukraine, Kazakhstan, Belarus, Russia, Turkey, Uzbekistan, etc.

• Expanding product distribution capacity to more institutional clients

…creation of customized investment products4

• G&T Brokerage• REPOs for institutional clients

• Securitized products

• Fixed income fund

• G&T TRADER• Futures on commodities (for CIB clients)

• Principal-hedged ETFs and Indices

3

10

Trading and custody capabilities of

international assets on all major

international exchanges

GEORGIA

• Equities

• Fixed Income

• CFDs

Onshore economy with offshore benefits

No capital gain tax on the internationally traded securities

No accounts reporting liability

High account safety

Fast and easy way to open account and transfer in/out assets/funds

WM CLIENTS GEORGIA & BOGINTERNATIONAL

ASSETS

INVEST AND

KEEP ASSETS

VIA

BANK OF GEORGIA

3

• Benefits of the Georgian jurisdiction has never been communicated to portfolio investors

• Therefore, almost no knowledge among investors community about Georgian jurisdiction benefits

• Government of Georgia must be involved in promoting Georgian jurisdiction to financial investors and international tax houses

11

Reduce

concentration risk

2

Growth of fee

business

3

Initiative Target results

Top 10 clients < 10% of total loan book

Regional wealth management and

brokerage powerhouse

ROE: 20%+

Resume loan

portfolio growth

1

10%+ p.a. loan book growth over the

next 3 years

12

13

BOG Properties For Sale