Bank of Georgia Holdings PLC announces Q3 2012 and nine months ended 30 September 2012 results

Bank of Georgia Holdings plc (LSE: BGEO LN) (the “Bank”), the holding company of JSC Bank of Georgia and its subsidiaries, Georgia’s leading bank, announced today the consolidated results for Q3 2012 and nine months ended 30 September 2012 (IFRS based, derived from management accounts). The Q3 2012 profit for the period was GEL 46.6 million, (US$ 28.1 million/GBP 17.4 million) or GEL 1.35 per share (US$ 0.81 per share/GBP 0.50 per share). The Bank reported nine months ended 30 September 2012 profit of GEL 132.7 million (US$ 80.0 million/GBP 49.4 million), or GEL 3.94 per share (US$2.37 per share/GBP1.46 per share). Unless otherwise mentioned, all comparisons are with the nine months ended 30 September 2011.

Strong performance trends continued in the third quarter of 2012

• Positive operating leverage maintained with strong profitability
  • Net interest margin of 7.8% in the first nine months of 2012, compared to 7.9% in 2011;
  • Q3 NIM declined, as expected, to 7.3% in Q3 2012, largely reflecting the impact of the Eurobond
    issued in July 2012.
  • Revenue increased by GEL 51.7 million, or 16.2%, y-o-y, to GEL 370.0 million; excluding the benefit of
    last year’s one-off currency hedge gains, revenue increased by 24.3%;
    • Q3 2012 revenue grew 24.9% y-o-y to GEL 131.0 million.
  • Positive operating leverage maintained, as operating expenses increased at a lower rate than revenue, up
    7.0% y-o-y to GEL 167.2 million; excluding last year’s one-off gains, operating leverage was 17.3%;
    • Q3 2012 operating expenses down 1.1% q-o-q to GEL 58.1 million.
  • Cost to Income ratio improved to 45.2% from 49.1% in the first nine months of 2012, 44.4% in Q3 2012
  • Profit before tax from continuing operations of GEL 158.7 million, up by GEL 29.8 million, or 23.1%.
  • Profit for the period increased by GEL 31.3 million, or 30.9%, to GEL 132.7 million.
  • Earnings per share (basic) increased by 17.1% to GEL 3.94.
  • Return on Average Assets (ROAA) increased to 3.6%, compared to 3.3%.
  • Return on Average Equity (ROAE) increased to 19.4%, from 18.9%.
• Strong balance sheet and capital position maintained
  • Cost of Funding declined to 7.5% in the nine months of 2012 compared to 7.8% in the same period last
    year.
    • Q3 2012 Cost of Funding of 7.1%, down from 7.5% in Q2 2012 and 7.8% in Q3 2011.
  • Net loan book increased by 19.6% y-o-y (17.1% year-to-date), while client deposits increased 24.4% y-o-y
    (5.3% year-to-date).
    • In US$ terms net loan book increased by 19.8% (17.9% year-to-date), reflecting the stable currency
      position.
  • Cost of Risk increased to 1.2% in the first nine months of 2012 from 0.9% for the same period last year. In
    absolute terms, cost of credit risk increased by GEL 15.2 million to GEL 28.6 million, largely reflecting the
    absence of last year’s net releases and recoveries and higher retail provisions in the third quarter of 2012.
  • Non-performing loans (NPLs) decreased 5.7% to GEL 102.7 million. NPLs accounted for 3.2% of gross
    loan book at 30 September 2012, compared to 4.1% at 30 September 2011 and 3.7% on 31 December 2011.
  • High provisions coverage of non-performing loans maintained at 105.2%.
  • Strong funding and liquidity position with a Net Loans to Customer Funds ratio of 109.6%, down from
    110.2% twelve months ago. NBG liquidity ratio of 42.0%, compared to 31.2% a year ago and to 30%
    minimum requirement by the NBG.
  • BIS Tier 1 capital adequacy ratio improved significantly to 20.3%.
  • Book Value per Share increased by 14.5% y-o-y to GEL 28.81 (US$17.36/GBP10.72).
  • Balance Sheet leverage stable at 4.5 times as of 30 September 2012, compared to 4.6 times at 30 September
    2011 and 4.2 times at 30 June 2012.
• Business highlights
  • Strong performances from each of the Bank’s businesses in Georgia – Corporate Banking and Retail
    Banking reported continued loan growth and improving efficiencies.
  • Retail Banking continues to deliver strong franchise growth, supported by the opening of 25 Express
    branches in the first nine months of 2012.
  • Corporate Banking has delivered strong, well-diversified balance sheet growth over the last 12 months;
    customer lending grew 23.3% and customer deposits grew 19.3%.
  • Wealth Management continued to expand its client franchise with deposits increasing by 65.8% to GEL
    595.3 million over the last 12 months.
  • Excellent progress in developing the Bank’s synergistic businesses: Insurance and Healthcare business
    expansion through acquisition of Imedi L International, the third largest insurance company in Georgia;
    Affordable Housing completed its pilot project of an 123 apartment building; a second 522 apartment
    building project is in progress.

“I am very pleased that our third quarter performance has reinforced the strong results of the preceding two quarters of the
year. This reflects a solid performance by each of our businesses. Despite the combination of a seasonally quiet quarter and
the pre-election period, we experienced growing demand for credit, as reflected in the 4.8% q-o-q growth of our loan book,
and have further improved our efficiency by bringing the Cost to Income ratio down by a further 1.1 percentage points to
44.4%. The effects of our recently issued Eurobond, are as expected: the Q3 2012 NIM declined to 7.3%, from 9.0% in Q2
2012 as a result of the additional interest expense. Balance sheet leverage increased to 4.5 times from 4.2 times at the end of
previous quarter.

In the first nine months of 2012 we have delivered strong net profit growth of 30.9% to GEL 132.7 million on the back of
double digit revenue growth, improved efficiency, as reflected in positive operating leverage, a reduced cost of funding and
healthy growth rates of our loan book and deposit balances. The cost of credit risk in the third quarter of 2012 increased to
GEL 14.6 million, compared to GEL 6.6 million in the preceding quarter. This increase largely reflected the impact of a
number of job reductions made in a large payroll client during the first half of the year and lower level of recoveries in the
third quarter. Corporate banking provisions were at a low level in the first nine months of 2012.

In September 2012, Bank of Georgia Holdings hosted its inaugural Investor Day in Tbilisi. It was gratifying for the entire
Bank of Georgia management team to see the interest and enthusiasm in the Bank of Georgia story as demonstrated by the
attendance of nearly fifty investors and analysts who traveled to attend our event from different parts of the world.

We have also recently announced management changes that reflect the evolving needs of our growing company. Following
his success in the transformation of Aldagi BCI into the country’s leading insurance and healthcare company, Nikoloz
Gamkrelidze has a new important role to play in the further development of the group in his new role of Group CFO.
Murtaz Kikoria, a seasoned banker and manager who has spent 4 years with the Bank of Georgia group, brings invaluable
experience as the new CEO of Aldagi BCI in its next stage of development.

The macroeconomic environment in Georgia remained robust with GDP growth reaching 7.5% in the first half of 2012.
Foreign direct investment (FDI) and net remittances have remained strong, and Georgia continues to benefit from a
substantial increase in tourist revenues, with visitor numbers increasing by 56% in the first nine months of the year to 3.2
million.

Following the parliamentary elections in early October, Georgia is currently in the process of what has been a smooth
transition to a new Government. This has not changed the business priorities and strategies of Bank of Georgia and business
trends in October have been consistent with our year-to-date performance.

With the parliamentary elections behind us, an enhanced management team and strong business fundamentals in place we
look to continuing to deliver value to our shareholders,” commented Irakli Gilauri, Chief Executive Officer of Bank of
Georgia Holdings PLC and JSC Bank of Georgia.