Download CAPTURING GROWTH OPPORTUNITIES

CAPTURING
GROWTH OPPORTUNITIES
Investor Presentation: 1Q17 results
DISCLAIMER
Forward Looking Statements
Disclaimer
This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets,
goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions,
competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development. Although BGEO Group PLC
believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such
expectations and opinions will prove to have been correct. By their nature, these forward-looking statements are subject to a number of known and
unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected
in such statements. Important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements,
certain of which are beyond our control, include, among other things: currency fluctuations, including depreciation of the Georgian Lari, and
macroeconomic risk; corporate loan portfolio exposure risk; regional tensions; regulatory risk; cyber security, information systems and financial crime
risk; investment business strategy risk; and 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 the 'Principal Risks and Uncertainties'
included in BGEO Group PLC's Annual Report and Accounts 2016. No part of this presentation constitutes, or shall be taken to constitute, an invitation
or inducement to invest in BGEO Group PLC or any other entity, and must not be relied upon in any way in connection with any investment decision.
BGEO Group PLC undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or
otherwise, except to the extent legally required. Nothing in this presentation should be construed as a profit forecast.
2
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
Georgian Macro Overview
73
Appendices
94
3
BGEO PORTFOLIO OF BUSINESS
Investment Business
Banking Business
BGEO
Group
Retail
Banking
Wealth
Management
Corporate Investment
Banking
Aldagi
(P&C
Insurance)
BNB
(Bank in
Belarus)
GHG
(Healthcare)
GGU
(Utility &
Energy)
Teliani Valley
m2
(Real Estate) (Beverages)
4
BGEO Capital allocation
Data as of 31 March 2017
unless otherwise stated
GEL 3,166.8mln1
Banking Business
Cash buffer
Investment Business
11%
At a glance
45%
44%
1Q17 ROAE
GEL 1,426.6mln
27.2%
Amount (GEL millions)
3.2%
34.0%
NMF
1,000
1,000
900
900
800
Capital
allocation
18.3%
GEL 335.2mln
GEL 1,405.0mln
1,000
951.3
900
800
800
730.8
700
700
700
574.3
600
600
500
500
400
400
300
500
400
275.5
300
200
200
72.7
100
46.7
2.1
0
100
600
649.82
200
128.9
301.53
CIB
BNB
P&C
Other BB
335.2
300
49.2
0.1
100
0
0
RB
Of which, GEL 99.5mln
is expected to be paid
as regular dividends for
2016
GHG
GGU
m2
Teliani Valley
Other IB
1. Comprises the sum of the following items: a book value of equity attributable to shareholders of BGEO of GEL 2,208.9mln, GEL 649.8mln market value adjustment to GHG’s
equity book value and long term borrowing of GEL 308.1mln
2. Market value of BGEO’s equity interests in GHG as of 5 May 2017
3. Book value of GHG’s Equity attributable to shareholders of the BGEO Group
Cash Buffer
5
BGEO PROFIT CONTRIBUTION
Data for 1Q17
unless otherwise stated
GEL 108.2mln
Banking Business
Investment Business
12%
At a glance

8%

80%
GEL 86.9mln
GHG
GEL 21.3mln
60
50.8
50
50
40
40
GEL millions
By
businesses
GEL millions
60
Investment Business,
excluding GHG
28.3
30
30
20
20
10
10
3.7
0.7
3.4
12.6
6.5
1.4
0.6
0.2
Teliani
m2
Other IB
0
0
RB
CIB
P&C
BNB
Other BB
GHG
GGU
6
BGEO
Shareholder structure and share price
BGEO shareholder structure
BGEO top shareholders
As of 31 March 2017
As of 31 March 2017
2%
5%
Unvested and unawarded shares
for management and employees
4%
Vested shares held by
management and employees
10%
Rank
Shareholder name
Ownership %
1
Harding Loevner Management LP
8.13
2
Schroders Investment Management
4.45
3
Artemis Investment Management
3.63
4
Westwood International Advisors
3.36
5
JP Morgan Asset Management
3.31
6
LGM Investments Ltd
3.22
US/Canada
UK/Ireland
13%
36%
Scandinavia
Luxembourg
30%
BGEO has been included in the
FTSE 250 and
FTSE All-share Index Funds
since 18 June 2012
BGEO share price performance
Up 333% since
premium listing*
33
23
18
13
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
8
Market capitalisation**
Average daily trading volume
US$ thousands
28
GBP
X154 growth in market capitalisation
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
9,500
5,300
5,725
5,000
4,533
2,000
950
2011 2012 2013 2014 2015 2016 As of
5 May
2017
US$ millions
Others
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
-
1,866
21
30-Sep-04
5-May-17
BGEO LN
Note*: Share price change calculated from the last price of BGEO LI on 27 February 2012 to the price of BGEO LN on 5 May 2017
Note**: Source: Bloomberg
7
DELIVERING ON 4x20 STRATEGY
We are a Georgia Focused INVESTMENT PLATFORM
Banking Business
23.5%
1
21.7%
ROAE
20%+
Retail loan
book growth
20%+
3
22.1%
Min. IRR
of 20%
20.6%
2014
2
Investment Business
2015
35.3%
2016
1Q17
4
39.5%
34.1%
28.1%
2014
2015
2016
121% IRR from GHG IPO
77% IRR from m2 Real Estate
projects
Profit
up to 20%
1Q17
18.3%*
17.7%*
19.7%
16.4%*
1
12.8%*
1Q16
2Q16
3Q16
4Q16
1Q17
* Excluding deferred tax adjustments, gain from bargain purchase of GGU and other non-recurring items.
8
Solid regular dividend and capital return track record
Regular dividends
Capital return
Capital return: GEL 113.0mln share buy-backs
since 2015
Regular dividends: GEL 333.7mln cash dividend paid
• US$20mln buy-back announced in
November 2016 complete
since 2010 DPS CAGR’10-16: 43.3%
• US$6mln invested in March 2017 and buyback complete as of the date of this
presentation
Share buyback and cancellation:
• A purchase and cancellation
programme of ordinary shares
• Up to US$ 50mln
• Over a two-year period
• In 1Q17 we repurchased
US$1.2mln
Crystallised value: BGEO holds GEL 951.3mln
worth of GHG shares**
10%
Banking Business Payout Ratio
15%
30%
36%
33%
34%
Buy-back and cancellation
Management trust buy-back
32%
50,000
120
2.6
2.10
1.50
97.6
20
1.00
80.4
0.50
23.6
0.00
0
2010
2011
2012
2013
Total dividends paid for the year
40,000
30,000
23,459
19,162
2014
2015
2016
Dividend per share
35,000
30,000
25,000
48,829
20,000
15,000
20,000
51.2
0.30
9.2
99.5
50,000
US$ thousands
1.50
60
71.6
40,000
60,000
2.00
0.70
45,000
2.50
80
40
70,367
GEL thousands
GEL millions
2.00
50,000
70,000
2.40
100
80,000
3.00
10,000
10,000
5,000
-
1,171
0
2015
2016
2017
BGEO share buy-backs (management trust)
31-Mar-17
Repurchased
Remaining
Note*: At the 2017 Annual General Meeting the Board intends to recommend an annual regular dividend for 2016 of GEL 2.6 per share payable in British Pounds
Sterling at the prevailing rate. This represents an 8.3% increase over the 2015 dividend
Note**: Calculation based on GHG stock market price as of 5 May 2017and BGEO ownership of GHG of 64.3%
9
Capital returns: 3-forms, 5-year cycle
3-forms
of
capital
return
5-year
cycle for
capital
return
1
2
Cash Dividends
Stock dividends
Strategy
Announced
2014
50% of regular dividends paid
during 2015-2019
5 years
2019
3
Share buy-back
50% of regular dividends paid
during 2020-2024
5 years
2024
10
BGEO
Robust corporate governance compliant with UK Corporate Governance Code
Board of Directors of BGEO Group PLC
6 non-executive Board of Director members; 6 Independent members, including the Chairman and Vice Chairman
Neil Janin, Chairman of the Board; Chairman of the
Nomination Committee, Independent Director
experience: formerly Director at McKinsey & Company
in Paris; formerly co-chairman of the commission of
the French Institute of Directors (IFA); formerly Chase
Manhattan Bank (now JP Morgan Chase) in New York
and Paris; Procter & Gamble in Toronto
Kim Bradley, Chairman of the Risk Committee, Independent
Director
experience: Goldman Sachs AM, Senior Executive at GE Capital,
President of Societa Gestione Crediti, Board Chairman at Archon
Capital Deutschland
Irakli Gilauri, Group CEO
experience: formerly EBRD banker; MS in banking
from CASS Business School, London; BBS from
University of Limerick, Ireland
Hanna Loikkanen, Independent Director
experience: currently advisor to East Capital Private Equity AB;
previously: Senior executive at East Capital, FIM Group Russia,
Nordea Finance, SEB
David Morrison, Chairman of the Audit Committee,
Senior Independent Director
experience: Senior partner at Sullivan & Cromwell LLP
prior to retirement
Tamaz Georgadze, Independent Director
experience: Partner at McKinsey & Company in Berlin, Founded
SavingGlobal GmbH, aide to President of Georgia
Al Breach, Chairman of the Remuneration Committee,
Independent Director
experience: Head of Research, Strategist & Economist
at UBS: Russia and CIS economist at Goldman Sachs
Jonathan Muir, Board Advisor; member of the Audit
Committee
experience: Executive Director (CEO) of LetterOne Holdings SA
and a CEO of LetterOne Investment Holdings; previously: CFO
and Vice President of Finance and Control of TNK-BP
11
BGEO
Robust corporate governance compliant with UK Corporate Governance Code
JSC Bank
of Georgia
Kaha kiknavelidze, CEO of Bank of Georgia
Previously managing partner of Rioni Capital, London based fund; prior to this, Kaha was
Executive Director of Oil and Gas research team for UBS; Over 15 years experience in the
equity markets
Georgia
Healthcare
Group
Senior Executive Compensation Policy applies to top executives and envisages long-term deferred and discretionary awards of securities and no cash bonuses to be paid to such
executives
Nikoloz Gamkrelidze, CEO, Georgia Healthcare Group
Previously Group CFO, CEO of Aldagi BCI and JSC My Family Clinic; World Bank Health
Development Project; Masters degree in International Health Management from Imperial
College London, Tanaka Business School
JSC Bank of Georgia
Ekaterina Shavgulidze, Head of Business Development
Previously Head of Investor Relations and Funding at BGEO;
Supervisory Board Member and Chief Executive Officer of
healthcare services business; Associate Finance Director at
AstraZeneca, UK ; MBA from Wharton Business School
Teliani
Valley
Levan Kulijanishvili, Group CFO and CFO at BOG
With the Group since 1997. Formerly Head of Security and Internal
Audit at Bank of Georgia; MBA from Grenoble School of Business,
in Grenoble, France
Georgia
Global
Utilities
Avto Namicheishvili, Group Legal Counsel
Previously partner at Begiashvili &Co, law firm in Georgia; LLM from
CEU, Hungary
m2 Real
Estate
BGEO Group PLC
Irakli Gilauri, Group CEO
formerly EBRD banker; MS in banking from CASS Business School,
London; BBS from University of Limerick, Ireland
Archil Gachechiladze, CEO, Georgia Global Utilities
With the Group since 2009. Previously Deputy CEO of the Bank, BGEO Group CFO, Deputy
CEO of TBC Bank; Lehman Brothers Private Equity, London; MBA from Cornell University
Irakli Burdiladze, CEO, m2 Real Estate
Previously CFO at GMT Group, Georgian real estate developer; Masters degree from John
Hopkins University
Shota Kobelia, CEO of Teliani Valley
With the Group since 2009. Previously Chief Commercial Officer in Pernod Ricard Georgia;
Masters degree in international sales marketing from Bordeaux Business School, France
Kaha kiknavelidze, CEO of Bank of Georgia
Previously managing partner of Rioni Capital, London based fund; prior to
this, Kaha was Executive Director of Oil and Gas research team for UBS;
Over 15 years experience in the equity markets
Ramaz Kukuladze, Deputy CEO, SOLO and MSME Banking
Previously Deputy CEO of Bank Republic Société Générale, Deputy CEO of Silknet
(telecommunications company), Deputy CEO of the Bank, CEO of BCI, insurance company;
Executive MBA degree from IE Business School
Levan Kulijanishvili, Deputy CEO, CFO
With the Group since 1997. 15 years of experience at BOG. Formerly
Head of Security and Internal Audit at Bank of Georgia; Holds MBA from
Grenoble School of Business, in Grenoble, France
George Chiladze, Deputy CEO, Chief Risk Officer
With the Group since 2008. Formerly Deputy CEO in Finance, Deputy CEO at Partnership
Fund, Programme trading desk at Bear Stearns NY; Ph.D. in physics from John Hopkins
University in Baltimore
Mikheil Gomarteli, Deputy CEO, Emerging and Mass Retail Banking.
With the Group since 1997. 15 years work experience at BOG,
including co-head of retail banking, head of business development
and head of strategy and planning; Undergraduate degree in
economics from Tbilisi State University
Tornike Gogichaishvili, Deputy CEO, Chief Operating Officer
With the Group since 2006. Previously CEO of Aldagi and CFO of BG Bank, Ukraine; Prior
to joining the bank, CFO of UEDC PA consulting; Executive Diploma from Said Business
School, Oxford
David Tsiklauri, Deputy CEO, Corporate Investment Banking
Previously Deputy CEO in charge of Corporate Banking at TBC Bank,
Vice President of the Capital Markets and Treasury Solutions team at
Deutsche Bank; MBA degree from London Business School
Alexander Katsman, Deputy CEO, HRM and Branding
With the Group since 2010. Previously Head of Branding Department at the Bank. Before
joining the bank he was a partner at Sarke, the largest communications’ group in Georgia;
EMBA from the Berlin School of Creative Leadership
12
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
Georgian Macro Overview
73
Appendices
94
13
BGEO
P&L results highlights
Quarterly P&L
BGEO Consolidated
1Q17
1Q16
GEL thousands unless otherwise noted
Net banking interest income
160,666
Net fee and commission income
29,885
Net banking foreign currency gain
19,274
Net other banking income
3,006
Gross insurance profit
10,223
Gross healthcare and pharmacy profit
52,342
Gross utility and energy profit
17,444
Gross real estate profit
2,701
Gross other investment profit
3,993
299,534
Revenue
(120,974)
Operating expenses
Operating income before cost of credit risk / EBITDA 178,560
Profit from associates
Depreciation and amortization of investment business
Net foreign currency loss from investment business
Interest income from investment business
Interest expense from investment business
Operating income before cost of credit risk
Cost of credit risk
Net non-recurring items
Profit before income tax expense
Income tax (expense) benefit
Profit
Earnings per share (basic)
Earnings per share (diluted)
514
(11,236)
6,955
1,420
(10,309)
165,904
(49,245)
(3,371)
113,288
(5,115)
108,173
2.64
2.55
Banking Business
Change
q-o-q
3.4%
-15.4%
-32.4%
36.7%
11.5%
24.0%
-19.2%
101.7%
-58.8%
-1.9%
3.1%
-5.1%
1Q17
1Q16
128,852
27,814
17,390
2,867
6,416
26,291
5,978
3,606
219,214
(83,242)
135,972
Change
4Q16
y-o-y
24.7%
155,403
7.4%
35,325
10.8%
28,516
4.8%
2,199
59.3%
9,171
99.1%
42,221
21,600
-54.8%
1,339
10.7%
9,697
36.6%
305,471
45.3% (117,358)
31.3%
188,113
161,647
30,135
19,274
3,095
7,210
221,361
(79,996)
141,365
1,866
(4,910)
(766)
956
(1,382)
131,736
(36,143)
1,366
96,959
(9,912)
87,047
2.10
2.10
-72.5%
128.8%
NMF
48.5%
NMF
25.9%
36.3%
NMF
16.8%
-48.4%
24.3%
25.7%
21.4%
102.4%
16.9%
NMF
-8.4%
18.9%
0.2%
-29.6%
NMF
17.6%
-32.3%
21.9%
15.3%
15.4%
514
141,879
(48,262)
(1,695)
91,922
(5,045)
86,877
2.27
2.19
254
(9,615)
(6,065)
1,551
(8,673)
165,565
(69,967)
698
96,296
(7,553)
88,743
2.29
2.21
130,219
28,015
17,390
3,168
5,343
184,135
(69,863)
114,272
Change
y-o-y
24.1%
7.6%
10.8%
-2.3%
34.9%
20.2%
14.5%
24.2%
114,272
(35,012)
(1,419)
77,841
(8,178)
69,663
1.78
1.78
NMF
24.2%
37.8%
19.5%
18.1%
-38.3%
24.7%
27.4%
23.0%
Investment Business
4Q16
1Q17
1Q16
158,371
36,645
28,516
2,506
6,445
232,483
(87,069)
145,414
Change
q-o-q
2.1%
-17.8%
-32.4%
23.5%
11.9%
-4.8%
-8.1%
-2.4%
1,723
26,291
5,978
3,675
37,667
(14,410)
23,257
Change
y-o-y
128.5%
99.1%
-49.6%
8.3%
114.5%
194.2%
65.1%
3,937
52,342
17,527
3,010
3,981
80,797
(42,392)
38,405
145,414
(70,873)
(1,056)
73,485
1,830
75,315
1.99
1.92
NMF
-2.4%
-31.9%
60.5%
25.1%
NMF
15.4%
13.9%
14.0%
(11,236)
6,955
2,298
(12,397)
24,025
(983)
(1,676)
21,366
(70)
21,296
0.37
0.36
4Q16
3,557
42,221
21,671
2,033
9,391
78,873
(32,163)
46,710
Change
q-o-q
10.7%
24.0%
-19.1%
48.1%
-57.6%
2.4%
31.8%
-17.8%
1,866
(4,910)
(766)
964
(2,947)
17,464
(1,131)
2,785
19,118
(1,734)
17,384
0.32
0.32
-100.0%
128.8%
NMF
138.4%
NMF
37.6%
-13.1%
NMF
11.8%
-96.0%
22.5%
16.3%
12.3%
254
(9,615)
(6,065)
540
(11,673)
20,151
906
1,754
22,811
(9,383)
13,428
0.30
0.29
-100.0%
16.9%
NMF
NMF
6.2%
19.2%
NMF
NMF
-6.3%
-99.3%
58.6%
24.7%
24.8%
* Note: Banking Business and Investment Business financials do not include interbusiness eliminations.
Detailed financials, including interbusiness eliminations are provided in annexes.
14
BGEO
Balance sheet highlights
Balance Sheet
BGEO Consolidated
GEL thousands unless otherwise noted
Liquid assets
Cash and cash equivalents
Amounts due from credit institutions
Investment securities
Loans to customers and finance lease receivables
Property and equipment
Mar-17
Mar-16
Change
y-o-y
3,606,926
1,285,483
1,090,111
1,231,332
6,408,711
1,388,938
2,948,699
1,359,219
764,435
825,045
5,359,718
835,651
22.3%
-5.4%
42.6%
49.2%
19.6%
66.2%
Mar-17
3,914,596
1,573,610
1,054,983
1,286,003
6,648,482
1,323,870
-7.9%
-18.3%
3.3%
-4.3%
-3.6%
4.9%
25.1% 12,989,453
12.7% 5,382,698
82.2% 3,470,091
43.3% 1,403,120
173.2% 1,085,640
91.9%
981,331
11.9% 1,255,643
-2.9%
-1.6%
-9.7%
-1.9%
-7.4%
-23.5%
-7.8%
-3.9%
9,243,177
7,751,805
19.2%
9,819,375
1.2%
1,435,581
1,278,250
12.3%
1,428,851
12,606,524 10,077,589
5,294,462 4,698,558
3,133,422 1,719,920
1,376,864
960,575
1,005,404
368,000
751,154
391,345
1,157,082 1,033,758
Total liabilities
10,153,771
7,926,740
28.1% 10,566,035
2,452,753
2,150,849
14.0%
2,423,418
Mar-16
Change
y-o-y
3,404,237
1,198,457
973,787
1,231,993
6,470,771
342,495
2,876,357
1,330,094
720,442
825,821
5,394,565
333,243
18.4%
-9.9%
35.2%
49.2%
19.9%
2.8%
10,678,758
5,591,720
2,662,909
1,143,408
1,005,404
514,097
827,024
9,030,055
4,962,432
1,630,299
926,210
368,000
336,089
957,474
Investment Business
Dec-16
Total assets
Client deposits and notes
Amounts due to credit institutions
Borrowings from DFI
Short-term loans from NBG
Loans and deposits from commercial banks
Debt securities issued
Total equity
Banking Business
Change
q-o-q
Dec-16
Change
q-o-q
Mar-17
Mar-16
Change
y-o-y
Dec-16
Change
q-o-q
3,712,489
1,482,106
943,091
1,287,292
6,681,672
339,442
-8.3%
-19.1%
3.3%
-4.3%
-3.2%
0.9%
503,589
353,485
146,798
3,306
1,046,443
337,602
288,512
47,936
1,154
502,408
49.2%
22.5%
206.2%
186.5%
108.3%
554,192
397,620
153,497
3,075
984,428
-9.1%
-11.1%
-4.4%
7.5%
6.3%
18.3% 11,248,226
12.7% 5,730,419
63.3% 3,067,651
23.5% 1,281,798
173.2% 1,085,640
53.0%
700,213
-13.6%
858,037
-5.1%
-2.4%
-13.2%
-10.8%
-7.4%
-26.6%
-3.6%
2,297,291
532,573
233,456
299,117
338,292
1,353,961
124,468
34,366
90,102
81,116
69.7%
327.9%
579.3%
232.0%
317.0%
2,194,926
435,630
121,323
314,307
407,242
4.7%
22.3%
92.4%
-4.8%
-16.9%
-5.9%
1,280,119
481,362
165.9%
1,200,359
6.6%
0.5%
1,017,172
872,599
16.6%
994,567
2.3%
Key Ratios*
Banking Business Ratios
ROAA
ROAE
Net Interest Margin
Loan Yield
Liquid assets yield
Cost of Funds
Cost of Client Deposits and Notes
Cost of Amounts Due to Credit Institutions
Cost of Debt Securities Issued
Cost / Income
NPLs To Gross Loans To Clients
NPL Coverage Ratio
NPL Coverage Ratio, Adjusted for discounted value of collateral
Cost of Risk
Tier I capital adequacy ratio (New NBG, Basel 2/3)**
Total capital adequacy ratio (New NBG, Basel 2/3)**
1Q17
1Q16
4Q16
3.2%
23.5%
7.4%
14.0%
3.4%
4.6%
3.5%
6.3%
6.0%
36.1%
4.6%
87.1%
126.9%
2.4%
11.2%
16.3%
3.0%
21.2%
7.5%
14.4%
3.1%
5.0%
4.3%
6.0%
7.2%
37.9%
4.5%
86.0%
122.6%
2.3%
10.1%
15.8%
2.9%
20.1%
7.6%
14.4%
3.3%
4.6%
3.5%
6.4%
6.1%
37.5%
4.2%
86.7%
132.1%
4.2%
10.1%
15.4%
Note*: for the description of Key ratios, refer to slide 108
Note**: Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for
regular dividends in respect of the 2016 financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO’s AGM. Excluding this amount, NBG
(Basel 2/3) Tier I and Total CAR would be 10.1% and 15.2%, respectively at 31 March 2017 and 9.1% and 14.4%, respectively, at 31 December 2016.
15
Sound revenue growth & organic growth in operating expenses
Revenues
+36.6%
-1.9%
350
305.5
299.5
GEL millions
300
250
219.2
200
37.7
78.9
80.8
232.5
221.4
(5.9)
4Q16
(2.7)
1Q17
150
100
184.1
50
0
-50
(2.6)
1Q16
Banking Business
Investment Business
Eliminations
Operating expenses
+45.3%
+3.1%
121.0
140
117.4
120
GEL millions
BGEO
100
80
83.2
32.2
42.4
87.1
80.0
(1.9)
4Q16
(1.4)
1Q17
14.4
60
40
69.9
20
0
-20
(1.1)
1Q16
Banking Business
Investment Business
Eliminations
16
BGEO
(1/2)
Balance sheet, 31 March 2017
BGEO
Banking Business
+25.1%
15,000
+18.3%
12,606.5
13,000
11,000
Assets
Gel
Millions
9,000
2,297.3
10,077.6
18.2%
8,000
10,678.8
9,030.1
84.7%
-1,000
6,000
10,678.8
-306.5
-369.6
31-Mar-16
31-Mar-17
2,000
6,470.8
60.6%
5,394.6
31.9%
3,404.2
2,876.4
31-Mar-16
Liquid Assets
Net loans and leases
All other assets
31-Mar-17
Banking Business
BGEO
+19.2%
+28.1%
9,243.2
161.6
827.0
1.7%
8.9%
2,662.9
28.8%
4,962.4
5,591.7
60.5%
31-Mar-16
31-Mar-17
10,000
13,000
10,153.8
11,000
9,000
7.5%
0
Eliminations
Investment Business Assets
Banking Business Assets
Liabilities
Gel
Millions
803.8
9,030.1
759.1
4,000
3,000
1,000
12,000
10,000
1,354.0
7,000
5,000
14,000
7,926.7
12.6%
8,000
7,751.8
201.6
957.5
6,000
1,630.3
1,280.1
481.4
91.0%
7,000
4,000
5,000
7,751.8
9,243.2
2,000
3,000
1,000
-1,000
0
(306.5)
31-Mar-16
Eliminations
Investment Business Liabilities
Banking Business Liabilities
(369.5)
31-Mar-17
All other liabilities
Debt securities issued
Amounts due to credit institutions
Client deposits and notes
17
BGEO
(2/2)
Balance sheet, 31 March 2017
m2 Real Estate
GHG
33.5%
1,200
300.2
300
1,000
Assets
GEL
Millions
-1.5%
350
1,109.5
800
737.8
600
250.2
501.1
45.2%
250
94.9
83.9
28.4%
87.1
101.0
34.1%
118.2
37.5%
588.6
600
500
267.5
45.4%
400
300
261.8
200
161.9
321.1
100
99.9
0
31-Mar-16
Borrowed funds
All other liabilities
31-Mar-17
54.6%
346.0
294.4
82.3%
100
50
31-Mar-16
31-Mar-17
190.2
18.8
200
180
160
140
120
100
80
60
40
20
0
31-Mar-17
PPE
Other assets
m2 Real Estate
GHG
124.8%
17.7%
31-Mar-16
Investment property
All other assets
Inventories
31-Mar-17
PPE
All other assets
700
110.8
0
31-Mar-16
200
150
50
-
74.3
66.7
300
100
608.4
350
250
150
487.6
361.1
400
54.8%
400
420.3
450
295.7
200
200
Liabilities
GEL
Millions
GGU
16.4%
GGU
20.1%
160
-14.6%
140
162.5
7.7
53.7
87.5
4.7%
120
33.0%
100
151.3
126.0
79.2
49.9
47.6%
80
60
83.9
101.1
62.3%
40
52.4%
76.1
72.1
31-Mar-16
31-Mar-17
20
31-Mar-16
31-Mar-17
Other liabilities
Accruals and deferred income
Borrowed funds
0
Other liabilities
Long-term borrowing
Note*: Borrowed Funds include - Amounts due to credit institutions and debt securities issued
18
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
Georgian Macro Overview
73
Appendices
94
19
BOG

The leading bank in Georgia
Leading market position1 in Georgia by assets (33.0%), loans (32.0%),
client deposits (32.8%) and equity (27.0%)2
Balance Sheet
Banking Business
CAGR 2013-1Q17: +18.5%

Underpenetrated market with stable growth perspectives: Real GDP
average annual growth rate of 4.9 % for 2006-2016; 2.7% real GDP
growth in 2016 and 5.0% y-o-y growth in 1Q17 according to Geostat.
Loans/GDP grew from 9.0% to 55.7% in the period of 2003-2016;
Deposits/GDP grew from 8.0% to 50.1% over the same period
Strong brand name recognition and retail banking franchise: Offers
the broadest range of financial products to the retail market through a
network of 274 branches, 813 ATMs, 2,723 Express Pay Terminals and
c.2.2 million customers as of 31 March 2017
12,000
+9.7%
+19.4%
+20.1%
11,248
10,679
10,000
GEL millions

+19.6%
8,000
6,000
9,171
7,044
6,682 6,471
6,158
5,730
5,367
4,441
3,712
3,007 3,404 3,567
4,000
5,592
4,994
3,482
3,141
1,875
2,000
1,315 1,436
1,429
1,904




Georgian company with credit ratings from global rating agencies:
Moody's: ‘B1/Ba3’ (foreign and local currency), Fitch Ratings: ‘BB-’;
outlooks are ‘Stable’
High standards of transparency and governance: The first entity from
Georgia to be listed on the premium segment of the Main Market of the
London Stock Exchange (LSE:BGEO) since February 2012. LSE listed
through GDRs since 2006
In August 2016, BOG completed its liability management exercise and
redeemed its 2017 Eurobonds outstanding in the amount of US$ 362mln
In July 2016, BGEO Group issued 7 year, US$ 350mln Eurobonds with
6.00% coupon. Bonds were trading at 5.80%3 on 5 May 2017
Sustainable growth combined with strong capital, liquidity and robust
profitability
1,064
Total assets
Liquid assets
31-Dec-13
Net loans to
customers
31-Dec-14
Client deposits
31-Dec-15
31-Dec-16
Total equity
31-Mar-17
Income Statement
Banking Business
Change y-o-y:
+20.2%
200
+24.7%
232
250
GEL millions

1,231
184 184
221
202
150
100
70 75
90
75
87
50
Revenue
1Q16
2Q16
Profit
3Q16
4Q16
1Q17
1
Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 31 March 2017 www.nbg.gov.ge
Including GEL 99.5mln dividend distributed from the bank to the holding level on 29 December 2016.
3 source: Bloomberg
2
20
BOG
The competition
Peer group’s market share in total assets
Peer group’s market share in gross loans
45%
40%
35%
36.4%
33.0%
6.5%
29.9%
30%
37.9%
40%
35%
7.6%
30.3%
32.0%
30%
25%
25%
20%
16.0%
15%
20%
16.8%
15%
10%
6.5%
5.4%
5%
4.3%
7.6%
10%
4.9%
4.7%
5%
0%
4.5%
4.1%
0%
BOG
TBC
BR
2014
LB
2015
PCB
2016
VTB
Others
BOG
TBC
1Q17
Foreign banks market share by assets
1Q17
Foreign
banks,
19.2%
Foreign
banks,
32.0%
Local
banks,
68.0%
PCB
2016
LB
Others
1Q17
37.6%
35%
32.8%
4.2%
33.4%
30%
No state
ownership of
commercial
banks since
1994
VTB
2015
Peer group’s market share in client deposits
40%
2006
BR
2014
25%
20%
12.6%
15%
7.7%
10%
Local
banks,
80.8%
5.3%
4.2%
5%
4.0%
0%
BOG
TBC
BR
2014
LB
2015
VTB
2016
PCB
Others
1Q17
Note: All data based on standalone accounts as reported to the NBG and as published by the NBG www.nbg.gov.ge as of 31 March 2017
21
Banking Business
Diversified asset structure and loan portfolio
YTD Loan Portfolio Growth**
Liquid assets | 31 March 2017
Total asset structure | 31 March 2017
Banking Business
Banking Business
Total: GEL 10.7bln
Total: GEL 3.4bln
YTD change:
-1.6%
1.3%
2.1%
200
Other liquid
assets
9.6%
Liquid
assets
31.9%
Cash and
equivalents
35.2%
Government
bonds,
treasury bills,
NBG CDs
26.6%
Loans to
customers,
net
60.6%
Stable loan portfolio
growth in the seasonally
quiet quarter
150
GEL millions
Other
assets
7.5%
100
144
72
50
(73)***
0
Amounts due
from credit
institutions
28.6%
YTD
1Q15
-50
YTD
1Q16
YTD
1Q17
-100
Loans breakdown | 31 March 2017
Banking Business
Retail Banking Loans breakdown by product
Total: GEL 3.9bln
Total Loans*
breakdown by segments
Total: GEL 6.7bln
21.5% of
total clients
Retail
loans, GEL
4,153.0
mln, 61.6%
Corporate
loans, GEL
2,589.3
mln, 38.4%
Gold Pawn
loans
1.6%
Automobile
loans
0.8%
POS loans
2.7%
0.8% of
total clients
Credit cards
and
overdrafts
7.2%
General
consumer
30.5% of
loans
total clients
23.2%
Financial
intermediation
2.8%
Mining and
quarrying
3.6%
Construction
10.6%
Mortgage
loans
30.4%
Micro- and
agrofinancing
loans and
SME loans
34.1%
Corporate Investment Banking Loans breakdown by sectors
Total: GEL 2.4bln
Electricity, gas
and water
supply
1.5%
1.9% of
total clients
Note*: Retail loans include loans of Retail Banking segment and BNB retail loans
Corporate loans include loans of Corporate Banking segment, Investment Management and BNB corporate loans
Note**: On a constant currency basis
Note***: Excluding PrivatBank Georgia acquisition impact
Transport &
Communication
4.7%
Health and
social work
3.5%
Other
6.4%
Manufacturing
29.8%
Trade
13.1%
Hospitality
7.2%
Service
Real estate
7.0%
9.8%
22
Banking Business
US$ Loan portfolio breakdown
Highlights

41.1% of Retail Banking loans were denominated in US$ with non-US$ income
 For RB: Loans 15 days past due were 1.4% as of 31 March 2017, compared to 1.1% a year ago and 1.2% as of 31 December 2016

30.8% of Corporate Investment Banking Loans were denominated in US$ with non-US$ income
Retail Banking | 31 March 2017
Corporate Investment Banking | 31 March 2017
Banking Business
Banking Business
4000
3,972.0
90
71.0
80
2.0%
6%
80.9
1.0
168.0
1.4%
2,000
70
1,852.2
50
2000
40
3%
68.8
3.7%
2%
30
2,048.8
1000
20
10
0
0
Loan portfolio
1%
* Includes credit cards
160
140
149.2
17.0
120
24.1
100
1,500
25%
6.3%
20%
10.1%
15%
80
1,000
1,786.0
60
10%
108.2
40
500
0.5%
0%
Provision amount
6.1%
0
0
Loan portfolio
LLR rate
5.7%
5%
20
11.1
USD
GEL
Other
Amounts in GEL millions
GEL and other currency loans
USD loans with USD income
USD loans with non-USD income
Total
422.0
4%
60
GEL millions
3000
2,376.0
2,500
5%
0%
Provision amount
LLR rate
USD
GEL
Other
RB Loan
portfolio
1,923
415
1,634
3,972
% of total
RB loan
portfolio
48.4%
10.4%
41.1%
100.0%
Mortgages
173
207
807
1,187
Consumer
SME & Micro
loans*
1,156
49
244
1,449
594
159
583
1,336
Amounts in GEL millions
GEL and other currency loans
USD loans with USD income
USD loans with non-USD income
Total
CIB Loan % of total CIB
portfolio loan portfolio
590
24.8%
1,055
44.4%
731
30.8%
2,376
100.0%
Note: standalone figures received from management accounts
23
24
Banking Business
Resilient loan portfolio quality
(1/2)
NPLs and NIM
NPL composition
Banking Business
7.7%
7.6%
350
GEL millions
241.1
250
311.9
153.6
150
100
7.4%
294.8
300
200
7.5%
4.3%
4.2%
4.6%
3.4%
50
0
2014
2015
2016
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
350
300
GEL millions
400
Banking Business
67.5%
250
200
150
100
0
1Q17
GEL millions
4.3%
50
38.2
47.6
202.0
194.9
161.4
122.8
18.8
45.0
54.6
69.4
2014
2015
2016
1Q17
NPL coverage ratio
4.6%
4.2%
3.4%
3.6%
2.3%
241.1
34.7
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Banking Business
3.7%
150
100
311.9
NPLs RB
NPLs CIB
NPLs Other
NPL coverage ratio
Banking Business
200
294.8
153.6
12.0
Loan loss reserve
250
87.1%
50
NPLs
NPLs to gross loans
Net Interest Margin
300
86.7%
83.4%
255.5
4.0%
271.5
201.1
103.8
0
2014
2015
Loan loss reserves (LLR)
NPLs to gross loans
LLR as % of gross loans
2016
1Q17
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
100%
90%
83.4%
86.7%
87.1%
80%
70%
67.5%
60%
50%
2014
2015
2016
1Q17
24
Banking Business
Resilient loan portfolio quality
(2/2)
Cost of Credit risk | quarterly
Cost of Risk | quarterly
38.0%
10bps
Banking Business
Banking Business
GEL millions
80.0
70.9
4.5%
-31.9%
70.0
4.0%
60.0
3.5%
32.2
50.0
4.2
-180bps
1.9%
3.0%
2.5%
40.0
2.0%
30.0
20.0
48.3
35.0
38.7
1.5%
1.0%
10.0
2.3%
2.3%
2.4%
1Q16
4Q16
1Q17
0.5%
0.0%
1Q16
Devaluation
4Q16
1Q17
Devaluation
25
Banking Business
Strong liquidity
(1/2)
Liquid assets to total liabilities
NBG liquidity ratio
Banking Business
BOG standalone
36.8%
37.8%
32.3%
9,819
10,000
9,243
40%
6,000
35%
5,000
30%
7,856
8,000
25%
5,813
6,000
20%
3,007
4,000
3,713
3,404
15%
10%
1,875
2,000
5%
0%
0
2014
2015
2016
GEL millions
38.3%
12,000
46.2%
35.0%
4,000
3,558
3,000
2,000
5,403
5,512
2,251
789
1,000
418
178
406
0
2014
2015
2016
Liquid assets (NBG)
Excess liquidity
NBG min requirement
Banking Business
2,060
2,039
1,245
1Q17
Net loans to customer funds
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1Q17
Liabilities (NBG)
Liquid assets / liabilities ≥ 30%
Net loans to customer funds & DFI
Banking Business
120%
127.5%
116.6%
120%
37.4%
4,871
Liquid assets
Total liabilities
Liquid assets to total liabilities
140%
37.7%
115.7%
107.5%
108.6%
110%
100%
90.8%
95.3%
96.1%
2016
1Q17
90%
100%
80%
80%
70%
60%
60%
50%
40%
40%
2014
2015
2016
1Q17
2014
2015
26
Banking Business
Strong liquidity
(2/2)
Foreign currency VAR analysis*
Liquidity coverage ratio & net stable funding ratio
JSC Bank of Georgia standalone
JSC Bank of Georgia standalone
60
250%
178.1%
151.5%
150%
111.9%
104.5%
97.0%
100%
40
GEL millions
200%
50
199.5%
163.8%
101.6%
32.2
30
20
10
20.0
12.4
5.2
23.7
17.3
9.3
8.5
3.8
3.4
5.4
6.3
7.4
0
50%
0%
2014
2015
Liquidity coverage ratio
2016
Q1 2017
Net stable funding ratio
Monthly VaR GEL (Average)
Cumulative maturity gap, 31 March 2017
Open currency position
JSC Bank of Georgia standalone
Banking Business
884,454
891,663
800,000
GEL thousands
793,349
714,920
200,000
0
-200,000
-400,000
15%
112,260
8.3%
8.3%
7.4%
1.1%
6.7%
-4.4%
On
0-3 Months 3-6 Months
6-12
Demand
Months
1-3 Years
10%
5%
>3 Years
-600,000
(470,129)
Maturity gap
20,000
20%
600,000
400,000
40,000
25%
Maturity gap, as % of total assets
0%
0
GEL thousands
1,000,000
VaR Limit
-20,000
9,678
0.7%
-1.4%
-12,578
2014
13,419
0.9%
4%
2%
0%
2015
2016
1Q17
-40,000
-2%
-60,000
-4%
-80,000
-5%
-100,000
-10%
-120,000
-129,074
-6%
-9.3%
-8%
-140,000
-10%
FC net position, on and off balance, total
Note*: Daily VaR time series averaged for each respective months
27
Banking Business
Funding structure is well established
Interest Bearing Liability structure | 31 Mar 17
Banking Business
Well diversified international borrowings | 1Q17
Banking Business
Interest Bearing
Liabilities GEL 9.1bn
Others
borrowings,
GEL 206.0 mln,
9.5%
Other debt
securities, GEL
222.8 mln,
10.2%
Debt
securities
issued, GEL
827.0 mln,
9.0%
Borrowings,
GEL 1,349.4
mln, 14.9%
Current
account
and
demand
deposits,
49.9%
Client
deposits &
notes, GEL
5,591.7 mln,
61.6%
Other
amounts due
to credit
institutions,
GEL 1,313.5
mln, 14.5%
Time
deposits,
50.1%
Eurobonds,
GEL 604.2 mln,
27.8%
Highlights for 1Q17
Borrowed funds maturity breakdown*
Banking Business
320.6
350
USD millions
•
Banking Business has a well-balanced funding structure with 61.6%
of interest bearing liabilities coming from client deposits and notes,
12.6% from Developmental Financial Institutions (DFIs) and 6.7% from
Eurobonds, as of 31 March 2017
•
The Bank has also been able to secure favorable financing from
reputable international commercial sources, as well as DFIs, such as
EBRD, IFC, FMO, DEG, ADB, etc.
•
As of 31 March 2017, US$ 94.4million undrawn facilities from DFIs with
up to seven year maturity
•
In July 2016, BGEO Group issued 7 year, US$ 350mln Eurobonds with
6.00% coupon. Bonds were trading at 5.80%** on 5 May 2017
10%
7.3%
8%
300
6%
250
2.7%
2.2%
1.3%0.8%
200
1.2%
4%
2.1%
0.3%
250.0
0.1%
0.04%
2%
0%
150
120.1
95.9
100
50
10.0
120.1
93.6
36.8
50.2
-6%
15.2
85.9
0
2017
2018
Senior Loans
2019
-2%
-4%
58.8
2020
2021
2022
Subordinated Loans
65.0
3.6
5.6
2023
2024
Eurobonds
DFIs, GEL
1,143.4 mln,
52.5%
90.0
-8%
1.8
3.6
-10%
2025
2026
% of Total assets
Note*: converted at GEL/US$ exchange rate of 2.4452 as of 31 March 2017
Note**: as of 5 May 2017 – source: Bloomberg
28
Banking Business
Strong underlying performance
Operating expenses | quarterly
Revenue growth | quarterly
Banking Business
232.5
-4.8%
+14.4%
Banking Business
+20.2%
-8.2%
100
221.4
250
GEL millions
74.1
59.8
GEL millions
184.1
200
53.9
150
100
130.2
50
69.9
0.9
9.1
80
158.4
161.6
4Q16
1Q17
60
87.1
1.5
9.8
80.0
0.7
9.8
25.7
23.2
20.1
40
20
39.8
50.1
46.3
0
0
1Q16
1Q16
4Q16
Other operating expenses
Administrative expenses
Net interest income
Net non-interest income
1Q17
Banking depreciation and amortisation
Salaries and other employee benefits
Operating income before cost of credit risk | quarterly
Net non-interest income | quarterly
Banking Business
Banking Business
+10.9%
200
-19.3%
60
74.1
2.6
59.8
28.5
3.2
53.9
3.2
50
40
17.4
30
5.3
20
10
28.0
19.3
6.4
36.6
7.2
30.1
114.3
50
0
-50
4Q16
141.9
100
1Q16
0
1Q16
Net fee and commission income
Gross insurance profit
Net banking foreign currency gain
Net other banking income
145.4
150
GEL millions
GEL millions
80
70
1Q17
-100
4Q16
(36.4)
1Q17
(50.0)
(71.9)
Cost of credit risk and net non-recurring items
Operating income before cost of credit risk
29
Focus on efficiency
Cost / Income | quarterly
Banking Business
38.5%
38.0%
37.5%
37.9%
37.5%
37.0%
36.5%
36.0%
36.1%
35.5%
35.0%
1Q16
4Q16
1Q17
Revenue and operating expenses | quarterly
Banking Business
Operating Leverage: +3.3% q-o-q
+5.7% y-o-y
232.5
250
GEL millions
Banking Business
200
221.4
184.1
150
100
69.9
87.1
80.0
50
0
1Q16
4Q16
1Q17
Revenue
Operating expenses
30
Banking Business
Growing income notwithstanding the pressure on yields
Loan Yields | quarterly
Banking Business
14.4%
120%
14.4%
14.0%
16%
14%
100%
12%
80%
10%
72.4%
60%
71.3%
66.5%
8%
6%
40%
4%
20%
27.6%
28.7%
33.5%
0%
2%
0%
1Q16
4Q16
Net loans, FC, consolidated
Net loans, GEL, consolidated
Currency-blended loan yield, annualised
1Q17
Loan Yields, Foreign currency | quarterly
Banking Business
15%
13%
11.0%
10.9%
1Q16
4Q16
11%
10.3%
9%
7%
5%
Loan yields excluding provisions
1Q17
31
Banking Business
Stable cost of funding
Cost of Funds | quarterly
One year US$ deposit rate *
Banking Business
Banking Business
5.2%
9%
5.0%
8%
5.0%
7%
8.00%
7.50%
6.50%
6%
4.8%
4.6%
4.6%
5.00%
5%
4.6%
4%
4.4%
3%
4.00%
4.00%
3.50%
3.50%
2%
4.2%
1%
4.0%
0%
1Q16
4Q16
1Q17
Cost of Customer Funds | quarterly
Banking Business
120%
4.3%
4.5%
3.5%
100%
3.5%
3.5%
3.0%
80%
60%
4.0%
77.6%
76.8%
73.7%
2.5%
2.0%
1.5%
40%
1.0%
20%
22.4%
23.2%
26.3%
1Q16
4Q16
1Q17
0.5%
0.0%
0%
Client deposits, FC, consolidated
Client deposits, GEL, consolidated
Currency-blended cost of client deposits, annualised
Note*: One year US$ deposit rates in retail segment
32
Banking Business
Excellent capital adequacy position
NBG (Basel 2/3), capital adequacy ratios
JSC Bank of Georgia standalone
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
11.2%*
10.1%
10.1%*
10.5%
8.5%
31-Dec-16
Tier I Capital Adequacy Ratio
Total Capital Adequacy Ratio
31-Mar-16
31-Mar-17
NBG Tier I CAR min requirement
NBG Total CAR min requirement
Risk Weighted Assets NBG (Basel 2/3)
NBG (Basel 2/3)Tier I Capital and Total Capital
JSC Bank of Georgia standalone
JSC Bank of Georgia standalone (BIS 2/3)
GEL ‘000
9,790
10,000
16.3%*
15.8%
15.4%*
9,467
9,500
Tier I Capital (Core)
Tier 2 Capital (Supplementary)
Total Capital
31-Mar-17* 31-Dec-16* 30-Sep-16 31-Dec-15 30-Sep-15 30-Jun-15 31-Mar-15
1,059.6
992.1
951.5
914.8
860.2
869.4
727.3
482.0
519.7
454.6
479.2
482.1
458.7
252.0
1,541.6
1,511.8
1,406.1
1,394.0
1,342.3
1,328.1
979.3
9,000
8,500
8,295
9,467.1
9,790.3
8,661.0
8,363.4
8,473.1
8,350.5
7,951.9
Tier 1 Capital ratio
11.2%
10.1%
11.0%
10.9%
10.2%
10.4%
9.1%
Total Capital ratio
16.3%
15.4%
16.2%
16.7%
15.8%
15.9%
12.3%
Risk weighted assets
8,000
7,500
1Q16
4Q16
1Q17
Note*: Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for regular dividends in respect of the 2016
financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO’s AGM. Excluding this amount, NBG (Basel 2/3) Tier I and Total CAR would be 10.1% and 15.2%, respectively at
31 March 2017 and 9.1% and 14.4%, respectively at 31 December 2016.
33
Retail
Banking
Retail banking
se
Data as at 31 March 2017 for JSC Bank of Georgia standalone
2
1
3
4
segments
Clients
Loans
Deposits
MSME
Micro, Small and Medium
Emerging Retail
Mass Retail
Mass Affluent
Business
488.6 k
1,546.8 k
21.7 k
130.4 k
GEL
217.3 mln
GEL
1,541.0 mln
GEL
877.6 mln
83.5 mln
GEL
1,143.0 mln
GEL
914.8 mln
GEL
1Q17 Profit
GEL
9.0 mln
Profit per
client
(annualised)
GEL
75.2
GEL
22.8mln
GEL
59.4
GEL
GEL
9.5mln
1,865.0
GEL
1,336.2 mln
GEL
251.0 mln
GEL
GEL
9.0 mln
279.5
P/C ratio
3.2
1.7
6.8
1.2
Branches
130
133
11
n/a
34
Retail Banking
Financial data, as at 31 March 2017
Balance sheet data
Income statement data
JSC Bank of Georgia Standalone
6%
Net Interest
Income
GEL 111.2mln
25%
Total Loans
GEL 3,972.0mln
22%
62%
13%
72%
Mass Retail & MSME (GEL 69.3 mln)
Solo (GEL 14.2 mln)
Express Bank (GEL 27.7 mln)
Mass Retail & MSME (GEL 2,877.1 mln)
Solo (GEL 877.6 mln)
Express Bank (GEL 217.3 mln)
4%
Total Deposits
GEL 2,392.3mln
38%
Net Fee &
Commission
Income
GEL 19.0mln
29%
58%
58%
13%
Mass Retail & MSME (GEL 1,394.0 mln)
Solo (GEL 914.8 mln)
Express Bank (GEL 83.5 mln)
Mass Retail & MSME (GEL 11.0 mln)
Solo (GEL 2.6 mln)
Express Bank (GEL 5.4 mln)
Data as at 31 March 2017 for JSC Bank of Georgia standalone
35
Retail Banking
Leading Retail bank in Georgia
RB Client Data
Operating Data, GEL mln
1Q2017
RB Portfolio breakdown
% of clients
2,187,499
Number of total Retail clients, of which:
2015
2014
2,141,229
1,999,869
1,451,777
Number of Solo clients (“Premier Banking”)
21,657
1.0%
19,267
11,869
7,971
Consumer loans & other outstanding, volume
Consumer loans & other outstanding, number
1,149.0
666,625
30.5%
1,103.6
647,441
835.6
625,458
691.8
526,683
Mortgage loans outstanding, volume
Mortgage loans outstanding, number
1,187.0
17,024
0.8%
1,227.6
16,300
809.0
12,857
600.9
11,902
Micro & SME loans outstanding, volume
Micro & SME loans outstanding, number
1,336.2
41,726
1.9%
1,346.3
36,379
903.9
19,045
666.0
16,246
291.3
305.7
135.0
Active credit cards and overdrafts outstanding, number
470,539
21.5%
442,487
435,010
199,543
Total credit cards outstanding, number, of which:
792,353
36.2%
800,621
754,274
116,615
84,132
3.8%
79,567
100,515
110,362
299.9
Credit cards and overdrafts outstanding, volume
American Express cards
RB Loans
Loans by products
Total: GEL 3.9 bn
Credit cards
and
overdrafts
7.2%
Deposits growth:
+25.9% y-o-y
in 1Q17
RB
3,902
GEL millions
3,000
2,067
2,000
1,000
2,414
2,500
3,891
2,901
2,796
2015
2016
0.8% of total
clients
30.5% of total
clients
General
consumer
loans
23.2%
Mortgage
loans
30.4%
Micro- and
agrofinancing
loans and
SME loans
34.1%
1.9% of
total clients
Deposits by category
Total: GEL 2.4 bn
1,500
1Q16
1Q17
Time
deposits
59.6%
1,902
1,880
2,000
Current
accounts
and
demand
deposits
40.4%
2,394
1,350
1,000
500
Deposits by currency
Total: GEL 2.4 bn
-
2014
Automobile
loans
POS loans
0.8%
2.7%
21.5% of
total clients
3,000
5,000
4,000
Pawn loans
1.6%
RB Deposits
Loans growth:
+34.1% y-o-y
in 1Q17
RB
GEL millions
2016
2014
2015
2016
1Q16
1Q17
Client
deposits,
GEL
25.7%
Client
deposits,
FC
74.3%
36
Retail Banking
Financial data
P&L
GEL thousands, unless otherwise noted
1Q17
1Q16
Change
y-o-y
4Q16
Change
q-o-q
111,511
22,245
6,492
982
141,230
(27,865)
(16,835)
(7,991)
(475)
(53,166)
514
88,578
(33,687)
(482)
54,409
(3,592)
50,817
82,832
19,239
3,590
711
106,372
(23,607)
(14,521)
(7,383)
(496)
(46,007)
60,365
(18,184)
(561)
41,620
(3,844)
37,776
34.6%
15.6%
80.8%
38.1%
32.8%
18.0%
15.9%
8.2%
-4.2%
15.6%
46.7%
85.3%
-14.1%
30.7%
-6.6%
34.5%
111,109
26,810
8,825
989
147,733
(31,149)
(17,287)
(8,052)
(818)
(57,306)
90,427
(19,272)
(1,921)
69,234
(1,235)
67,999
0.4%
-17.0%
-26.4%
-0.7%
-4.4%
-10.5%
-2.6%
-0.8%
-41.9%
-7.2%
-2.0%
74.8%
-74.9%
-21.4%
190.9%
-25.3%
INCOME STATEMENT HIGHLIGHTS
Net banking interest income
Net fee and commission income
Net banking foreign currency gain
Net other banking income
Revenue
Salaries and other employee benefits
Administrative expenses
Banking depreciation and amortisation
Other operating expenses
Operating expenses
Profit from associate
Operating income before cost of credit risk
Cost of credit risk
Net non-recurring items
Profit before income tax
Income tax (expense) benefit
Profit
Loan Yield
100%
17.4%
17.6%
Deposit Cost
20%
16.8%
100%
18%
90%
16%
80%
14%
70%
60%
12%
60%
50%
10%
50%
40%
8%
40%
6%
30%
4%
20%
90%
80%
70%
30%
20%
50.5%
49.5%
54.3%
45.7%
60.8%
39.2%
15.9%
54.2%
45.8%
10%
0%
2014
2015
Net loans, RB, GEL
Net loans, RB, FC
Currency-blended loan yield, RB
2016
1Q17
2%
10%
0%
0%
3.8%
4.5%
3.9%
4.0%
3.3%
3.0%
67.6%
74.1%
75.0%
74.3%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
32.4%
25.9%
25.0%
25.7%
2015
2016
1Q17
0.5%
0.0%
2014
Client deposits, RB, FC
Client deposits, RB, GEL
Currency-blended cost of client deposits, RB
37
Retail Banking
Loan yield, cost of deposits & NIM
RB Loan Yield
30%
RB Cost of Deposit
6%
25.4% 25.4% 24.9%
20%
4.8%
5%
25%
4%
17.4% 16.4% 15.9%
15%
10.9% 10.1% 9.4%
4.0%
3.5%
4.4%
3.2%
3.1% 3.0%
3%
10%
2%
5%
1%
2.7%
2.6%
0%
0%
Loan Yield
Loan yield, GEL
1Q16
4Q16
Cost of deposits
Loan yield, FC
Cost of deposits, GEL
1Q17
1Q16
4Q16
Cost of deposits, FC
1Q17
RB NIM
12%
11%
10%
9.2%
9.3%
1Q16
4Q16
8.8%
9%
8%
7%
6%
5%
1Q17
38
Corporate Investment Banking
Financial data
P&L
GEL thousands, unless otherwise noted
1Q17
1Q16
Change
y-o-y
4Q16
Change
q-o-q
37,949
5,666
11,429
2,259
57,303
(12,346)
(3,535)
(1,217)
(157)
(17,255)
40,048
(8,699)
(1,155)
30,194
(1,912)
28,282
38,250
7,020
11,368
2,587
59,225
(11,155)
(3,355)
(1,272)
(231)
(16,013)
43,212
(14,138)
(856)
28,218
(2,687)
25,531
-0.8%
-19.3%
0.5%
-12.7%
-3.2%
10.7%
5.4%
-4.3%
-32.0%
7.8%
-7.3%
-38.5%
34.9%
7.0%
-28.8%
10.8%
39,168
8,133
16,158
2,518
65,977
(12,368)
(4,943)
(1,262)
(330)
(18,903)
47,074
(42,172)
2,267
7,169
2,885
10,054
-3.1%
-30.3%
-29.3%
-10.3%
-13.1%
-0.2%
-28.5%
-3.6%
-52.4%
-8.7%
-14.9%
-79.4%
NMF
321.2%
NMF
181.3%
INCOME STATEMENT HIGHLIGHTS
Net banking interest income
Net fee and commission income
Net banking foreign currency gain
Net other banking income
Revenue
Salaries and other employee benefits
Administrative expenses
Banking depreciation and amortisation
Other operating expenses
Operating expenses
Operating income before cost of credit risk
Cost of credit risk
Net non-recurring items
Profit before income tax
Income tax (expense) benefit
Profit
Loan Yield
100%
10.6%
10.7%
10.4%
Deposit Cost
10.7%
80%
60%
100%
10%
80%
8%
86.8%
90.0%
83.3%
82.1%
60%
4.1%
4.1%
3.9%
3.9%
5%
4%
70.0%
72.2%
74.8%
69.4%
3%
6%
40%
40%
2%
4%
20%
0%
12%
2%
13.2%
10.0%
2014
2015
Net loans, CIB, GEL
Net loans, CIB, FC
Currency-blended loan yield, CIB
16.7%
17.9%
2016
1Q17
0%
20%
30.0%
27.8%
25.2%
30.6%
2014
2015
2016
Q1 2017
0%
1%
0%
Client deposits, CIB, FC
Client deposits, CIB, GEL
Currency-blended cost of client deposits, CIB
39
Corporate Investment Banking
Loan book & Deposits
Portfolio breakdown, 31 March 2017
Highlights
Loans by sectors
• No.1 corporate bank in Georgia
Financial
intermediation
2.8%
• Integrated client coverage in key sectors
• c.3,151 clients served by dedicated relationship
bankers
Mining and
quarrying
3.6%
6.4%
Electricity, gas
and water
supply
1.5%
Loans & Deposits
GEL millions
2,500
2,179
2,211
2,395
Trade
13.1%
Hospitality
7.2%
2,227
2,000
1,500
Service Real estate
7.0%
9.8%
Time
deposits,
38.8%
LC, 30.6%
FC, 69.4%
1,000
500
0
CIB net loans
2015
Top 20 CIB borrowers
represent 44.9% of
total CIB loan book
2,929
1,991
2014
Top 10 CIB borrowers
represent 32.0% of
total CIB loan book
Deposits by category
3,059
2,871
3,000
Manufacturing
29.8%
Construction
10.6%
Transport &
Communication
4.7%
3,500
Health and
social work
3.5%
Other
2016
Current
accounts
and
demand
deposits,
61.2%
1Q17
CIB client deposits
40
Corporate Investment Banking
Loan yield, cost of deposits & NIM
CIB Loan Yield
13.1% 13.0%
12.5%
14%
12%
CIB Cost of Deposit
10.3%
11.1% 10.7%
10.2%
10.8%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
10.3%
10%
8%
6%
4%
2%
0%
Loan Yield
Loan yield, GEL
1Q16
4Q16
Loan yield, FC
8.0%
6.6%
5.0%
4.5%
3.6%
3.9%
Cost of deposits
1Q17
3.1% 3.2%
Cost of deposits, GEL
1Q16
4Q16
2.9%
Cost of deposits, FC
1Q17
CIB NIM
7%
6%
5%
4%
3.7%
3.6%
3.4%
1Q16
4Q16
1Q17
3%
2%
1%
0%
41
Investment Management
1
Unrivalled platform for profitable growth
Research
Wealth Management
• Strong international presence: Israel
2
• Sector, macro and fixed income
coverage
• International distribution
(since 2008), UK (2010), Hungary (2012) and Turkey (2013).
Planned expansion - Cyprus, Singapore, USA.
• AUM of GEL 1,569 million, up 16.7% y-o-y
• Diversified funding sources:
•
•
•
•
•
4
Georgia 37%
Israel 12%
UK 4%
Germany 3%
Other 44%
Brokerage
Investment
Management
Corporate Advisory
3
• Bond placement
• Wide product coverage
• Exclusive partner of SAXO Bank via
While Label structure, that provides highly adaptive
trading platform with professional tools, insights and
world-class execution
• In March 2016, G&T successfully placed a 2-year US$ bond into
the local market for a non-BGEO Group affiliated company,
Nikora
• In June 2016 G&T successfully placed a five-year GEL
denominated bond into the local market for EBRD
• In August 2016 G&T successfully placed a five-year GEL
denominated bond into the local market for Black Sea Trade
and Development Bank
• In October 2016 G&T successfully placed three-year US$ bond
into the local market for the Group’s subsidiary m2 Real Estate
• In December 2016 G&T acted as a joint placement agent for the
Group’s subsidiary Georgia Global utilities, having placed fiveyear GEL denominated bond into the local market
• Corporate advisory platform
• Team with sector expertise and international M&A experience
• Proven track record of more than 15 completed transactions
over the past 8 years.
42
Become Regional Private Bank
WM CLIENTS
BECOME REGIONAL PRIVATE BANK
BOG & GEORGIA
INTERNATIONAL
ASSETS
GEORGIA
INVEST
AND KEEP
ASSETS VIA
 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
BANK OF GEORGIA
•
•
•
Equities
Fixed Income
CFDs
Trading and custody capabilities of
international assets on all major
international exchanges
43
Banking Business Targets & priorities next 2-3 years
TARGETS & PRIORITIES NEXT 2-3 YEARS
PRIORITIES
1
Grow Retail Banking share in loan book
2
Increase
Product to Client Ratio
3
De-concentrate Corporate Loan Book
(Top 10 borrowers )
4
Develop regional private banking franchise
(AUM, GEL mln)
STRATEGIC TARGETS
ROAE
Retail Banking
Growth
Target: 20%+
1Q17: 23.5%
Target: 20%+
1Q17: 34.1% y-o-y
44
Targets & priorities
KEY
targets
PRIORITIES
1
ROAE
Targets
1Q17
1Q16
20%+
23.5%
21.2%
20%+
34.1%
9.9%
2
Retail Banking
Growth
1
Grow RB’s share in loan
book
65%
62.6%
56.5%
2
Increase Mass Retail
Product to Client Ratio
3.0
1.7
1.7
3
Increase number of Solo
clients
To 40,000
21,657
13,284
4
De-concentrate
Corporate Loan Book
Top 10 borrowers: 10%
11.3%
12.1%
5
Become a regional
private banking hub
AUM: GEL 2.5bln
GEL 1.6bln
GEL 1.3bln
7.25% - 7.75%
7.4%
7.5%
c. 35%
36.1%
37.9%
80-120%
87.1%
86.0%
c.2.0%
2.4%
2.3%
1
Long-term
outlook
Banking Business
NIM
2
Cost / Income
3
NPL coverage ratio
4
Cost of Risk
45
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
•
Georgia Healthcare Group (GHG)
Georgian Macro Overview
73
Appendices
94
46
GHG
Income statement highlights
P&L
GEL thousands; unless otherwise noted
Revenue, gross
Corrections & rebates
Revenue, net
Revenue from healthcare services
Revenue from pharmacy
Net insurance premiums earned
Eliminations
Costs of services
Cost of healthcare services
Cost of pharmacy
Cost of insurance services
Eliminations
Gross profit
Salaries and other employee benefits
General and administrative expenses
Impairment of healthcare services, insurance premiums and other receivables
Other operating income
EBITDA
Depreciation and amortisation
Net interest expense
Net gains/(losses) from foreign currencies
Net non-recurring income/(expense)
Profit before income tax expense
Income tax benefit
of which: Deferred tax adjustments
Profit for the period
Attributable to:
- shareholders of the Company
- non-controlling interests
of which: Deferred tax adjustments
•
Organic growth of healthcare services revenue was 10.1% in 1Q17
•
Healthcare services EBITDA margin was 25.3% in 1Q17
Change,
y-o-y
1Q17
1Q16
186,627
(623)
186,004
65,905
111,399
13,965
(5,265)
(129,926)
(37,957)
(84,408)
(12,734)
5,173
56,078
(17,728)
(13,352)
(1,121)
1,182
25,059
(5,872)
(7,119)
2,778
(1,792)
13,054
(19)
13,035
72,576
(410)
72,166
60,041
13,830
(1,705)
(44,151)
(33,892)
(11,953)
1,694
28,015
(6,923)
(3,202)
(980)
220
17,129
(4,465)
(1,656)
(260)
1,968
12,716
(693)
12,023
157.1%
52.0%
157.7%
9.8%
1.0%
208.8%
194.3%
12.0%
6.5%
205.4%
100.2%
156.1%
317.0%
14.4%
437.3%
46.3%
31.5%
329.9%
NMF
NMF
2.7%
NMF
8,832
4,203
9,921
2,102
4Q16
Change,
q-o-q
8.4%
136,031
(790)
135,241
66,814
56,586
16,312
(4,471)
(89,626)
(34,802)
(44,498)
(14,997)
4,671
45,615
(12,757)
(9,470)
56
845
24,289
(5,316)
(4,773)
(3,170)
1,982
13,012
(6,682)
(5,319)
6,330
37.2%
-21.1%
37.5%
-1.4%
96.9%
-14.4%
17.8%
45.0%
9.1%
89.7%
-15.1%
10.7%
22.9%
39.0%
41.0%
NMF
39.9%
3.2%
10.5%
49.2%
NMF
NMF
0.3%
NMF
105.9%
-11.0%
100.0%
5,401
929
63.5%
352.4%
47
GHG
Georgian healthcare market & GHG market share evolvement
Healthcare services
Pharmacy
Medical insurance
Key Segments
Key Services
Referral Hospitals
Community Hospitals
Ambulatory Clinics
General and specialty hospitals
offering outpatient and inpatient
services in Tbilisi and major
regional cities
Basic outpatient and
inpatient services in
regional towns and
municipalities
Outpatient diagnostic and
treatment services in Tbilisi and
major regional cities
Market Size (1)
Market
Share
GEL 1.3bln (2015)
20% by revenue (2)
23.4% by beds (2,557), which is expected to grow to c.29% as a result of
renovation and full launch of hospital facilities (additional c.600 beds);
1.5% by revenue (2)
29% by revenue (3)
35% by revenue
ten clusters with
13 district ambulatory clinics
28 express ambulatory clinics
245 pharmacies in major cities
135,000 individuals insured
15 hospitals
2,092 beds
Gross
GEL
186.6mln(4)
2012-1Q17
CAGR 52%
20 hospitals
465 beds
2%
3%
GEL 5.7 mln
2012-1Q17
CAGR 15%
58%
2012-1Q17
CAGR 32%
GEL 3.6 mln
GEL 111.4 mln
2%
GEL 25.1mln
GEL 0.17bln (2015)
18%
82%
GEL 56.6 mln
EBITDA
Range of private insurance
products purchased by individuals
and employers
GEL 0.9bln (2015)
30%
Revenue
Wholesaler and urban-retailer,
with a countrywide distribution
network
Medical Insurance
GEL 1.2bln (2015)
Selected
Operating
Data
1Q17
Financials
1Q17
Pharmacy
7%
GEL 14.0 mln
2012-1Q17
CAGR 15%
-2%
35%
65%
2012-1Q17
CAGR 52%
GEL 16.3 mln
EBITDA Margin: 25.9%
GEL 0.5 mln
2012-1Q17
CAGR 31%
EBITDA Margin: 14.2%
Sources:
(1) Frost & Sullivan analysis, 2015
(2) Market share for pharmacy business is for 2015 year, including ABC’s market share
(3) Market share for pharmacy business is for 2015 and is based on 2015’s revenue figures
(4) Revenue net of intercompany eliminations
GEL 8.7 mln
EBITDA Margin: 7.8%
GEL -0.4 mln
EBITDA Margin: -3.2%
48
GHG
Long-term, high-growth story
2015-2018
Georgia 2014 or most recent year(1)
Spending
per capita (US$)
Price inflation
(heart surgery, US$)
GHG Revenue
per bed (US$)
Medium-term Target
(5-10 Year Horizon)
Georgia medium-term(1)
EM 2014 or most recent year (2)
1,076
502
217 (Georgia)
$
Long-term Target
(Beyond 10 Year Horizon)
$
6,500 (GHG)
$
9,000
280k
99k
39,800 (GHG)
Significant
expansion of
capacity by 2025
25,000
Substantial room
to grow beyond
2025
Outpatient
Encounters per
capita
4.0 (Georgia)
Nurse to doctor
ratio
1:1.3 (Georgia)
WHO
recommendation)
3.4:1
38.4% (Georgia)
25%
15.4%
Pharmaceuticals’
share in total
healthcare spending
5.4
8.9
4:1 (Georgia,
Sources:
(1)
Bed utilisation for referral hospitals; World Bank; GHG internal reporting; Management Estimates; Ministry of Finance of
Georgia; Frost & Sullivan 2015; NCDC healthcare statistical yearbook 2014
(2)
WHO: Average of countries: Chile, Costa Rica, Czech Republic, Estonia, Croatia, Hungary, Lithuania, Latvia, Poland, Russian
Federation, Slovak Republic; BAML Global Hospital Benchmark, August 2014
49
GHG
Long-term, high-growth prospects
GHG HAS FULL PRESENCE IN GEORGIAN HEALTHCARE ECOSYSTEM
Segment
HOSPITALS
AMBULATORIES
PHARMACY
INSURANCE
Market
GEL 1.2bln
GEL 0.9bln
GEL 1.3bln
GEL 0.17bln
BY REVENUE
BY REVENUE
BY REVENUE
(2015)
Market shares
In 2015
Now
YE2018
Long-term
BY REVENUE | BEDs
18% | 27%
20% | 23%
25% | 28%
30%+
<1%
1.5%
5%
15%
30%+
38%
35%
30%+
15%+
30%+
30%+
50
GHG
Focused growth strategy through 2018
GHG HAS FULL PRESENCE IN GEORGIAN HEALTHCARE ECOSYSTEM
Segment
Market share
Targets 2018
HOSPITALS
AMBULATORIES
PHARMACY
INSURANCE
25%+
5%
30%+
30%+
8.0%+ EBITDA
margin
• Combined ratio
<97%
(BY REVENUE)
P&L targets • Doubling 2015 revenue by 2018
(2015 revenue was GEL 195.0mln)
•
With 30% EBITDA margin
• Claims retained
within GHG
>50%
51
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
•
m2 Real Estate
Georgian Macro Overview
73
Appendices
94
52
m2
Financial highlights
P&L
Income Statement Highlights
Gel thousands, unless otherwise stated
Revenue from sale of apartments
Cost of sale of apartments
Net revenue from sale of apartments
Revenue from operating lease s
Cost of operating leases
Net revenue from operating leases
Revaluation of commercial property
Gross real estate profit
Gross other investment profit
Revenue
Salaries and other employee benefits
Administrative expenses
Operating expenses
EBITDA
Depreciation and amortization
Net foreign currency gain (loss)
Interest income
Interest expense
Net operating income before non-recurring items
Net non-recurring items
Profit before income tax
Income tax (expense)
Profit
1Q17
1Q16
Change,
y-o-y
4Q16
Change,
q-o-q
18,399
(17,109)
1,290
899
(83)
816
479
2,585
11
2,596
(407)
(1,427)
(1,834)
762
(66)
(194)
189
(48)
643
(76)
567
567
27,992
(22,099)
5,893
589
(47)
542
6,435
88
6,523
(297)
(1,027)
(1,324)
5,199
(53)
386
(74)
5,458
(23)
5,435
(815)
4,620
-34.3%
-22.6%
-78.1%
52.6%
76.6%
50.6%
NMF
-59.8%
-87.5%
-60.2%
37.0%
38.9%
38.5%
-85.3%
24.5%
NMF
NMF
-35.1%
-88.2%
NMF
-89.6%
-100.0%
-87.7%
9,356
(7,811)
1,545
859
(44)
815
1,430
3,790
48
3,838
(374)
(1,202)
(1,576)
2,262
(65)
(58)
410
(30)
2,519
(96)
2,423
(2,949)
(526)
96.7%
119.0%
-16.5%
4.7%
88.6%
0.1%
-66.5%
-31.8%
-77.1%
-32.4%
8.8%
18.7%
16.4%
-66.3%
1.5%
NMF
-53.9%
60.0%
-74.5%
-20.8%
-76.6%
-100.0%
NMF
53
m2
Financial highlights
Balance Sheet
Balance sheet
GEL thousands, unless otherwise noted
Cash and cash equivalents
Amounts due from credit institutions
Investment securities
Accounts receivable
Prepayments
Inventories
Investment property, of which:
Land bank
Commercial real estate
Property and equipment
Other assets
Total assets
Amounts due to credit institutions
Debt securities issued
Accruals and deferred income
Other liabilities
Total liabilities
Share capital
Additional paid-in capital
Other reserves
Retained earnings
Total equity
Total liabilities and equity
Mar-17
Mar-16
Change
y-o-y
Dec-16
Change
q-o-q
48,636
179
1,515
6,130
17,842
83,922
110,831
68,789
42,042
9,110
17,557
295,722
38,912
62,278
53,670
7,657
162,517
4,180
86,227
13,469
29,329
133,205
295,722
49,003
2,001
981
23,449
94,881
118,187
83,967
34,220
1,528
10,147
300,177
37,118
46,771
87,465
18,817
190,171
4,180
83,612
22,214
110,006
300,177
-0.7%
-24.3%
524.9%
-23.9%
-11.6%
-6.2%
-18.1%
22.9%
496.2%
73.0%
-1.5%
4.8%
33.2%
-38.6%
-59.3%
-14.5%
0.0%
3.1%
100%
32.0%
21.1%
-1.5%
93,210
2,842
703
20,746
113,009
113,829
72,251
41,578
7,050
20,839
372,228
42,818
103,077
77,925
14,725
238,545
4,180
85,467
15,538
28,498
133,683
372,228
-47.8%
-46.7%
772.0%
-14.0%
-25.7%
-2.6%
-4.8%
1.1%
29.2%
-15.7%
-20.6%
-9.1%
-39.6%
-31.1%
-48.0%
-31.9%
0.0%
0.9%
-13.3%
2.9%
-0.4%
-20.6%
54
m2
Performance highlights
PROJECTS: RESIDENTIAL & HOTEL
Apartment building:
Chubinashvili street
Completion status: 100%
Apartment building:
Moscow avenue
Completion status: 100%
Apartment building:
Tamarashvili street
Completion status: 100%
Apartment building:
Kartozia Street
Completion status: 45%
Construction start date: Nov 15
Apartment building:
Kazbegi avenue
Completion status: 100%
Apartment building:
Skyline
Completion status: 85%
Construction start date: Dec 15
Apartment building:
Nutsubidze Street
Completion status: 100%
Apartment building:
Kazbegi avenue II
Completion status: 18%
Construction start date: Jun 16
Apartment building:
Tamarashvili Street II
Completion status: 100%
Apartment building:
Chavchavadze Avenue
Completion status: 13%
Construction start date: Oct 16
55
m2
At a glance – major player on Georgian real estate market
1
2
Residential Developments
Affordable housing
Yielding Business
Commercial space (offices, industrial
properties, high street retail)
Hotels
Market: US$ 2.5bln2
Market: US$ 1.9bln3
Market: US$ 1.0bln1
m2
targets
As a residential real estate developer,
mass market customers by introducing high quality
and comfortable living standards in Georgia and
making them affordable.
Key
Segments
& market
size
Includes:
Asset
base (as
of 1Q17)
1. Inventory of residential
real estate
2. Land bank
US$ 79 million 4
65%
m2
makes opportunistic
As a property manager,
investments and manages a well diversified portfolio of
yielding assets, primarily consisting of high street real
estate assets, and also including industrial and office
space real estate assets.
As a hotel developer and operator, m2 targets 3-star,
mixed use hotels (residential combined with hotel
development). m2 finances equity needs of the hotel
from the profits and land value unlocked through
sale of the apartments in the same development.
Includes:
Includes:
1. High street retail
2. Industrial properties:
warehouses and logistics
centers
3. Offices
US$ 18 million
15%
1. Hotels (mixed use)
2. Land bank
US$ 4 million
3%
Dollar denominated, inflation hedged cash flow stream
-
Track
record
-
Generated IRR ranging from 31% to 165% on 6
completed residential projects
Started operations in 2010 and since:
- Completed 6 projects – 1,672 apartments,
98% sold with US$138.1 mln sales value, land
value unlocked US$16.4 mln
- Ongoing 4 projects – 1,222 apartments, 45%
sold with US$44.9 mln sales value, land value
to be unlocked US$16.5 mln
All completed projects were on budget and on
schedule
Land bank of value US$26.75 mln, with
c.5,1265 apartments
•
•
Generated annual yield of 9.7% in 2015 on
portfolio rented out. Rent earning assets are with
capital appreciation upside.
m2 has developed its current yielding portfolio
through:
• m2 attained exclusive development agreement
with Wyndham to develop Wyndham’s 3-star
brand Ramada Encore exclusively in Georgia. Plan
is to build at least 3 hotels within next 7 years with
minimum 370 rooms in total.
•
• 3 projects in the pipeline:
1) 2 hotels in Tbilisi – land acquired,
construction of the 1st hotel commenced
in June 2016, 2nd hotel in design stage
2) 1 hotel in Kutaisi – searching for property
•
m2 retains commercial space (ground floor) at
its own residential developments. This
constitutes up to 25% of total yielding portfolio
Acquired opportunistically the commercial
space. This constitutes over 75% of total
yielding portfolio
1 – US$ value of annual transaction (incl. renovation/fit-out costs) in the capital city in 2015 (NPRG, Colliers, Company own data)
2 – trade volume in Georgia in 2015
3 – gross tourism inflows in 2015
4 – Total Assets are US$ 121mln. Pie charts do not sum-up to 100% due to Cash holdings of US$ 20mln
5 – Including 4,716 apartments of Digomi Project
˗
Land bank of value US$1.25 mln
56
m2
Performance highlights
STRONG SALES PERFORMANCE
76% of total apartments are sold
Completed projects are sold out
Completed apartments: 1.9% in stock
Ongoing apartments: 55.0% in stock
2,894 apartments in total
Number of apartments
Number of apartments by projects
1000
900
In
stock,
704
819
800
Sold,
2,190
Sold
700
Stock
600
525
500
400
295
300
200
Financed with BOG mortgages:
1,000 apartments, GEL 118.5mln
270
221
302
238
123
82
100
19
0
Sep-10 May-12 Dec-13 Dec-13 Jul-14 Sep-14 Nov-15 Dec-15 Jun-16 Oct-16
Chubinashvili
Tamarashvili
Kazbegi
Nutsubidze
Tamarashvili II
Moscow ave. Kartozia
Skyline
Kazbegi II
50
Chavchavadze
ave.
Entering hotel business:
In 2016, launched
construction of our first 3star hotel (mixed-use)
57
m2
Hotel strategy
3-star hotel opportunity in Tbilisi
Develop 3 hotels in next 7 years in Tbilisi
catering to budget travelers
Visitors in Georgia
26.1% CAGR’03-16
Limited supply
Distribution of rooms in Tbilisi by
accommodation type, 2017
6.4mln visitors in 2016, up 7.7% y-o-y
7,000
6,351
5,898
5,516
5,392
6,000
5,000
Internationally
branded hotels,
Other
29%
accommodation
units (local) , 71%
4,428
4,000
2,822
3,000
•
•
•
•
•
•
•
Wyndham Ramada Anchor exclusivity for 7 years
Equity investment US$ 7 million
Number of rooms – 370
Investment per room – US$ 70k
Occupancy rate – 65% (3rd year stabilised)
ADR – US$ 100
ROE – 20%
2,000
1,000
313 368
2,032
1,500
1,290
1,052
763
560
•
Occupancy rate of international branded hotels
was 71.2% in March 2017, while YTD
occupancy rate reached 55.4%, up 2% y-o-y
•
March 2017 ADR – US$ 137.4, up 8.1% y-o-y.
YTD ADR of US$ 129.8 , up 1.2% y-o-y
0
Foreign visitors (thousand persons)
Source: Galt & Taggart Research
58
m2
Performance highlights
TARGETS & PRIORITIES NEXT 2-3 YEARS
1
Unlocking land value by developing housing projects. Buy land opportunistically
2
Start developing 3rd party lands
3
Accumulate yielding assets from own-developed projects :
• Mainly retain commercial real estate in residential buildings
• Develop hotels and apartments (mixed-use) to increase yielding business
•
•
•
•
•
•
NAV (Net Asset Value) – US$ 54.5mln
Land bank – US$ 28mln
Yielding assets currently – US$ 17.2mln
Deferred revenue – US$ 22.0mln (inc. VAT)
Capital management discipline – pay US$ 20-25mln dividends to BGEO in 2019
Possibility to establish m2 as a REIT
Note: actual figures are as of 31 March 2017
59
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
•
GGU – Georgian Global Utilities
Georgian Macro Overview
73
Appendices
94
60
GGU
Income statement highlights
P&L
GEL thousands; unless otherwise noted
Revenue from water supply to legal entities
Revenue from water supply to individuals
Revenue from electric power sales
Revenue from technical support
Other income
Revenue
Provisions for doubtful trade receivables
Salaries and benefits
Electricity and transmission costs
Raw materials, fuel and other consumables
Infrastructure assets maintenance expenditure
General and administrative expenses
Taxes other than income tax
Professional fees
Insurance expense
Other operating expenses
Operating expenses
EBITDA
EBITDA Margin
Depreciation and amortisation
EBIT
EBIT Margin
Net interest expense
Foreign exchange gains(losses)
EBT
Income tax (expense)
Profit
•
•
•
1Q17
1Q16
18,336
7,911
1,191
673
491
28,602
274
(4,121)
(4,972)
(791)
(301)
(787)
(1,032)
(430)
(285)
(1,370)
(13,815)
14,787
52%
(4,803)
9,984
35%
(2,189)
(101)
7,694
7,694
16,986
7,597
3,267
742
(29)
28,563
(746)
(3,784)
(4,721)
(893)
(666)
(710)
(604)
(612)
(67)
(1,236)
(14,039)
14,524
51%
(5,390)
9,134
32%
(2,368)
(49)
6,717
(1,199)
5,518
Change,
y-o-y
7.9%
4.1%
-63.5%
-9.3%
NMF
0.1%
NMF
8.9%
5.3%
-11.4%
-54.8%
10.8%
70.9%
-29.7%
NMF
10.8%
-1.6%
1.8%
-10.9%
9.3%
-7.6%
106.1%
14.5%
-100.0%
39.4%
4Q16
19,598
8,636
3,641
2,056
2,312
36,243
687
(4,010)
(3,748)
85
(402)
(751)
(1,155)
(819)
(269)
(2,085)
(12,467)
23,776
66%
(3,753)
20,023
55%
(3,049)
190
17,164
(1,659)
15,505
Change,
q-o-q
-6.4%
-8.4%
-67.3%
-67.3%
-78.8%
-21.1%
-60.1%
2.8%
32.7%
NMF
-25.1%
4.8%
-10.6%
-47.5%
5.9%
-34.3%
10.8%
-37.8%
28.0%
-50.1%
-28.2%
NMF
-55.2%
-100.0%
-50.4%
GGU recorded revenue of GEL 28.6mln in 1Q17. Revenue from water sales represented c.91.8% of total revenue
GGU reported EBITDA of GEL 14.8mln for 1Q17. EBITDA grew by 1.8% y-o-y
GGU recorded profit of GEL 7.7mln in 1Q17, reflecting a 39.4% growth y-o-y
Sources: derived from GGU’s management accounts, financials are for 1Q17
61
GGU
Statement of financial position highlights
Balance sheet
GEL thousands; unless otherwise noted
Cash and cash equivalents
Trade and other receivables
Inventories
Current income tax prepayments
Total current assets
Property, plant and equipment
Investment Property
Intangible assets
Restructured trade receivables
Restricted Cash
Deferred income tax
Other non-current assets
Total non-current assets
Total assets
Mar-17
13,910
30,944
3,108
998
48,960
346,048
18,922
1,207
178
4,008
993
371,356
420,316
Mar-16
10,117
26,710
3,635
920
41,382
294,419
19,484
1,143
23
3,141
280
1,188
319,678
361,060
Change
y-o-y
37.5%
15.9%
-14.5%
8.5%
18.3%
17.5%
-2.9%
5.6%
NMF
27.6%
-100.0%
-16.4%
16.2%
16.4%
Dec-16
27,511
29,499
3,048
735
60,793
329,997
18,728
1,186
307
5,094
1,246
356,558
417,351
Change
q-o-q
-49.4%
4.9%
2.0%
35.8%
-19.5%
4.9%
1.0%
1.8%
-42.0%
-21.3%
-20.3%
4.2%
0.7%
Current borrowings
Trade and other payables
Provisions for liabilities and charges
Other taxes payable
Total current liabilities
Long term borrowings
Deferred income tax liability
Deferred income
Total non-current liabilities
Total liabilities
22,566
28,172
743
2,718
54,199
79,242
17,817
97,059
151,258
21,921
22,461
1,359
1,684
47,425
49,907
28,681
78,588
126,013
2.9%
25.4%
-45.3%
61.4%
14.3%
58.8%
-100.0%
23.5%
20.0%
22,617
24,997
706
7,135
55,455
83,651
83,651
139,106
-0.2%
12.7%
5.2%
-61.9%
-2.3%
-5.3%
-100.0%
8.7%
Share capital
Retained earnings
Revaluation reserve
Total equity
Total liabilities and equity
2
87,595
181,461
269,058
420,316
2
80,293
154,752
235,047
361,060
0.0%
9.1%
17.3%
14.5%
16.4%
2
96,782
181,461
278,245
417,351
0.0%
-9.5%
0.0%
-3.3%
0.7%
•
•
GGU balance sheet is characterised with low leverage and modest foreign exchange risk exposure
Currently 99.7% of GGU’s borrowings are denominated in local currency. The plan is to further reduce foreign-currency-denominated
borrowings
Sources: derived from GGU’s management accounts, financials are for 1Q17
62
GGU
Cash flow statement highlights
Cash flow
1Q17
30,582
(10,765)
(3,758)
419
(2,356)
(1,724)
945
13,343
1Q16
29,254
(10,047)
(2,801)
105
(2,510)
(2,877)
(624)
10,500
Change,
y-o-y
4.5%
7.1%
34.2%
NMF
-6.1%
-40.1%
NMF
27.1%
4Q16
41,042
(8,066)
(6,640)
30
(2,653)
(2,202)
(2,729)
18,782
Change,
q-o-q
-25.5%
33.5%
-43.4%
NMF
-11.2%
-21.7%
NMF
-29.0%
(8,835)
4,508
(3,874)
6,626
128.1%
-32.0%
(8,801)
9,981
0.4%
-54.8%
(13,486)
(5,917)
127.9%
(9,572)
40.9%
Total cash flow used in investing activities
(13,486)
(5,917)
127.9%
(9,572)
40.9%
Proceeds from borrowings
Repayment of borrowings
Dividends paid out
Total cash flow used in financing activities
(4,328)
(4,328)
380
(2,501)
(54)
(2,175)
-100.0%
73.1%
-100.0%
99.0%
27,562
(6,565)
151
21,148
-100.0%
-34.1%
-100.0%
NMF
(295)
(13,601)
(50)
(1,516)
NMF
NMF
556
22,113
NMF
NMF
27,511
13,910
11,633
10,117
136.5%
37.5%
5,398
27,511
409.7%
-49.4%
GEL thousands; unless otherwise noted
Cash receipt from customers
Cash paid to suppliers
Cash paid to employees
Interest received
Interest paid
Taxes paid
Restricted cash in Bank
Cash flow from operating activities
Maintenance Capex
Operating cash flow after maintenance capex
Purchase of PPE and intangible assets
Exchange gains/(losses) on cash equivalents
Total cash (outflow)/inflow
Cash balance
Cash, beginning balance
Cash, ending balance
•
GGU has good receivables collection rates within the 95-98% range. During 1Q17, the collection rate for legal entities and households
was 98% and 94%, respectively. As a result, GGU had GEL 3.2mln overdue receivables outstanding as of 31 March 2017
•
Currently there are 1.4mln people living in Tbilisi, Rustavi and Mtskheta regions, while only 1.2mln residents are registered with GGU
Sources: derived from GGU’s management accounts, financials are for 1Q17
63
GGU
A privately-owned natural monopoly
GGU is the only profitable water-utilities player in Georgia with plenty of efficiency rooms
Company has strong execution track record & financial
strength
GGU is the largest privately owned water utility company in
Georgia
• 2 core activities:
 Water supply and sanitation (including wastewater collection and
processing) – Provides water to 1.4mln people (1/3 of Georgia)
1Q17: 144.4M m3
 Generation of electric power – Owns 3 HPPs and has 1 HPP under
management with total installed capacity of 149.1MW. Generated
power is primarily used by GGU’s water business. The excess
amount of generated power is sold to the third party clients every
year
• Management team with extensive experience in utility business
• “BB-” rating affirmed by Fitch Ratings to major subsidiary of GGU –
Georgian Water and Power in 2016 (currently Georgia’s sovereign rating is
“BB-” and the country ceiling is BB by Fitch)
• First bond placement by utility company in Georgia (GEL 8.6mln) through
Georgian Water and Power in 2015
• GGU issued GEL 30mln 5-year local currency bond– the largest amount ever
issued in local currency by a non-financial institution in Georgia
• Low leverage (2016 Debt/EBITDA: 1.6x)
• Revenue of GEL 28.6mln in 1Q17, +0.1% y-o-y
• EBITDA of GEL 14.8mln in 1Q17, +1.8% y-o-y
EBITDA (in GEL mln) & EBITDA margin (in %)
CAGR’14-18
+10.5%
GEL millions
100
52.3%
75
54.9%
55.1%
50%
53.7%
40%
45.2%
50
25
60%
30%
55.3
61.6
68.5
75.3
82.3
0%
2014
2015
2016
2017F
•
20%
10%
0
EBITDA growth drivers:
•
Cost saving from reduction in water
delivery losses to 30%, from current
50%
Double effect from water delivery loss
reduction – selling freed-up energy
2018F
64
GGU
Utility and energy business strategy
1
2
UTILITY
ENERGY
BUSINESS
HYDRO & other renewables
WATER UTILITY
CURRENT
STANDING
MEDIUM
TERM GOAL
REVENUE 1Q17: GEL 28.6mln
EBITDA 1Q17: GEL 14.8mln
70% water losses
HYDROs:
149MW operating
50MW ready to build
57MW pipeline
EBITDA 2018: GEL 80mln+
50% water losses
HYDROs:
200MW operating
57MW ready to build
150MW pipeline
WIND & SOLAR: 20-20MW ready to build
TARGETING
DIVIDEND PROVIDER
VALUE CREATION UPSIDE
IPO in 2-3 years time
65
Renewable Energy
Opportunity
1
Underpenetrated
industry
Only 20-25% of Georgia’s hydro resources utilised
Cheap to develop
US$ 1.5mln for 1MW development in Georgia
Opportunities
2
3
Strategic partnership
Strategic partnership with industry specialists – RP Global (Austria)
4
5
Small investment to
date
Only US$ 1.5mln invested during first 2 years of due-diligence and
planning
BGEO planned
investment in ongoing
projects
BGEO investment – US$ 28mln
Total investment – US$ 43mln (partnership: 65% BGEO – 35% RP Global)
Expected IRR – 20%+
66
Renewable Energy
Goal
5 year roadmap
Establish renewable energy platform,
targeting 100MW+ in 4 medium size hydro power plants by 2020
Development
2 ongoing projects – 107MW, 4 HPPs
Pipeline
Projects
Mestiachala
1&2
Zoti
1&2
Estimated Capacity 100 MW
50MW
57MW
Estimated Project Timeline2
2017-2018
2018-2020
Note: Project timeline includes only construction period. In general construction period is preceded by a 1-2 year preconstruction period. On average 5% of total project cost is spent during this period on due diligence
67
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
•
Teliani Valley
Georgian Macro Overview
73
Appendices
94
68
Teliani Valley
Goal
Teliani Valley | Targets & priorities
(beverage business)
Become leading beverages producer and distributor in Caucasus
Wine production
Distribution
Beer production
Russian Federation
Black
Sea
Poti
Batumi
Business
Segments
Turkey
• c. 600 thousand bottles sold in
1Q17
• 4,600 sales points
• GEL 4.0mln revenue in 1Q17
• Exporting wine to 12 countries,
including all FSU, Poland, Sweden,
• GEL 0.6mln EBITDA in 1Q17
• 71% of sales from export
Priorities
By 2018
• Grow in line with
market locally
• Enhance exports
Finland, USA, Canada, Brazil,
China, Thailand, Singapore
• Enhance product
portfolio, becoming the
leading FMCG
distributor in Georgia
Caspian
Sea
Georgia
Tbilisi
Rustavi
Armenia
Azerbaijan
Baku
• Launch beer production facility in
Georgia
• 10 year exclusivity with Heineken to
sell in Georgia, Armenia and
Azerbaijan (17mln population)
• Achieve 30% market share
Strategic sale
69
Teliani Valley
Exclusive Heineken producer in Caucasus
Exclusive Heineken producer in Caucasus
Strong management with proven
track record
Highly concentrated market
Domestic market segmentation
(2016)
Investment
Rationale
EBITDA
3.4
1.3
1.7
2
-0.9
43%
1.7
1.5
Efes Georgia
11%
3.4
3.1
2.5
0.9
0.2
3%
Net Income
Castel
1.8*
37%
0.9
0.5
0.3
Zedazeni
Low consumption per capita
compared to peers
Beer Consumption in Peer Countries 2015
(l/capita)
160
140
120
100
80
60
40
20
0
Peer
Average 67
Kazbegi
-0.7 -0.4
2009 2010 2011 2012 2013 2014 2015 2016 1Q17
* 1Q17 net income included foreign exchange gains of GEL 2.4mln related to the Lari’s appreciation during three months of 2017
70
Teliani Valley
Exclusive Heineken producer in Caucasus
Exclusive Heineken producer in Caucasus
EBITDA projection
Investment
Exit options
EBITDA Evolution, US$ mln (20182022)
Financials
12.0
• Total investment – US$ 41.3mln, of
which US$ 21.7mln is equity
• BGEO’s investment – US$ 16.3mln
10.0
20.6%
22.4%
24.1%
23.1%
24.2% 30%
25%
20%
8.0
6.0
4.0
2.0
5.4
7.7
6.6
7.9
3.6
• Trade sale
15%
10%
2.5
2.6
2.8
2.9
3.0
2018E
2019E
2020E
2021E
2022E
5%
0%
0.0
Global Beer Georgia EBITDA
Teliani Valley EBITDA
EBITDA margin
71
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
Georgian Macro Overview
73
Appendices
94
72
Georgia at a glance
General Facts
• Area: 69,700 sq km
• Population (2017): 3.7 mln
• Life expectancy: 77 years
• Official language: Georgian
• Literacy: 100%
• Capital: Tbilisi
• Currency (code): Lari (GEL)
Economy
• Nominal GDP (Geostat) 2016: GEL 33.9 bln (US$14.3 bln)
• Real GDP growth rate 2012-2016: 6.4%, 3.4%, 4.6%, 2.9%, 2.7%
• Real GDP 2006-16 annual average growth rate: 4.9%
• GDP per capita 2016 (PPP) per IMF: US$ 10,044
• Annual inflation (e-o-p) 2016: 1.8%
• External public debt to GDP 2016: 35.2%
• Sovereign credit ratings:
S&P
BB-/Stable, affirmed in November 2016
Moody’s Ba3/Stable, affirmed in March 2016
Fitch
BB-/Stable, affirmed in March 2017
73
Georgia’s key economic drivers
Liberal economic policy
Regional logistics and
tourism hub
Top performer globally in WB Doing Business over the past 12 years
•
Liberty Act (effective January 2014) ensures a credible fiscal and monetary framework:
•
Public expenditure/GDP capped at 30%; Fiscal deficit/GDP capped at 3%; Public debt/GDP capped at 60%
•
Business friendly environment and low tax regime (attested by favourable international rankings)
A natural transport and logistics hub, connecting land-locked energy rich countries in the east and European markets in the west
•
Access to a market of 900mn customers without customs duties: Free trade agreements with EU, CIS and Turkey and GSP with USA, Canada, Japan, Norway and
Switzerland; Signing of Georgia-China free trade agreement scheduled for 14 May 2017
•
Tourism revenues on the rise: tourism inflows stood at 15.1% of GDP in 2016 and arrivals reached 6.4mln visitors in 2016 (up 7.6% y-o-y). In 4M17 international arrivals
reached 1.8mln visitors (up 11.1% y-o-y).
•
Regional energy transit corridor accounting for 1.6% of the world’s oil and gas transit volumes
Strong FDI
An influx of foreign investors on the back of the economic reforms have boosted productivity and accelerated growth
•
FDI at US$1,645mln (11.5% of GDP) in 2016 (up 5.2% y-o-y)
•
FDI averaged 9.8% of GDP in 2007-2016
•
Productivity gains accounted for 66% of the annual average 5.6% growth over 1999-2012, according to the World Bank
Support from international
community
Georgia and the EU signed an Association Agreement and DCFTA in June 2014
•
Visa-free travel to the EU is another major success in Georgian foreign policy. Georgian passport holders were granted free entrance to the EU countries from 28 March 2017
•
Discussions commenced with the USA to drive inward investments and exports
•
Strong political support from NATO, EU, US, UN and member of WTO since 2000; Substantial support from DFIs, the US and EU
Electricity transit hub
potential
Political environment
stabilised
Developed, stable and competitively priced energy sector
•
Only 20% of hydropower capacity utilized; 120 renewable (HPPs/WPPs/SPPs) energy power plants are in various stages of construction or development
•
Georgia imports natural gas mainly from Azerbaijan
•
Significantly boosted transmission capacity in recent years, a new 400 kV line to Turkey and 500 kV line to Azerbaijan built, other transmission lines to Armenia and Russia
upgraded
•
Additional 5,000 MW transmission capacity development in the pipeline, facilitating cross-border electricity trade and energy swaps to Eastern Europe
•
•
•
•
•
•
•
Georgia underscored its commitment to European values by securing a democratic transfer of political power in successive parliamentary, presidential, and local elections and
by signing an Association Agreement and free trade agreement with the EU
New constitution amendments passed in 2013 to enhance governing responsibility of Parliament and reduce the powers of the Presidency
Continued economic relationship with Russia, although economic dependence is relatively low
Russia began issuing visas to Georgians in March 2009; Georgia abolished visa requirements for Russians -The Russian side announced to ease visa procedures for
Georgians citizens effective December 23, 2015
Direct flights between the two countries resumed in January 2010
Member of WTO since 2000, allowed Russia’s access to WTO; In 2013 trade restored with Russia
In 2016, Russia accounted for 9.8% of Georgia’s exports and 6.9% of imports; just 3.6% of cumulative FDI over 2003-2016
74
Growth oriented reforms
Ease of Doing Business | 2017 (WB-IFC Doing Business
Report)
New Zealand
USA
Estonia
Georgia
Germany
Canada
Czech Rep.
Japan
Kazakhstan
Armenia
Russia
Montenegro
Azerbaijan
Turkey
Ukraine
Iran
1
Estonia
UK
Georgia
8
12
16
17
22
27
up from 23rd in 2016
USA
Latvia
6
12
13
Top 5 in Europe region out of 44 countries
17
20
Romania
Bulgaria
Hungary
34
35
38
40
39
47
56
Turkey
Azerbaijan
France
51
60
68
72
Italy
Russia
65
69
79
114
Ukraine
80
166
120
Global Corruption Barometer | TI 2016
Germany
Georgia
Poalnd
Czech Rep.
Slovak Rep.
Latvia
Montenegro
Bulgaria
Turkey
Lithuania
Armenia
Bosnia & Herz.
Romania
Kazakhstan
Russia
Ukraine
Azerbaijan
Moldova
Economic Freedom Index | 2017 (Heritage Foundation)
3%
Business Bribery Risk, 2014 | Trace International
Germany
USA
Georgia
Norway
Netherlands
UK
Estonia
Poland
Czech Rep.
Serbia
Turkey
Montenegro
Romania
Armenia
Russia
Azerbaijan
% admitting having paid a bribe last year
7%
7%
Georgia is on a par with EU member states
9%
12%
15%
16%
17%
18%
24%
24%
27%
29%
29%
34%
38%
38%
9
10
11
12
13
19
22
31
52
67
70
73
83
87
134
140
42%
Sources: Transparency International, Heritage Foundation, World Bank, Trace International
75
Government 4-pillar of reforms
Structural Reforms
Promoting Transit & Tourism Hub
Tax Reform
•
•
Corporate income tax reform
Enhancing easiness of tax compliance
Capital Market Reform
•
•
Boosting stock exchange activities
Developing of local bond market
Rail
Pension Reform
•
Introduction of private pension system
Air
•
Introduction of transparent and efficient PPP
framework
Public Investment
Management Framework
•
Improved efficiency of state projects
Deposit Insurance
•
•
Boosting private savings
Enhancing trust to financial system
Accounting Reform
•
•
Increased transparency and financial accountability
Enhanced protection of shareholder rights
PPP Reform
Roads
•
Plan to finish all spinal projects by 2020 – EastWest Highway, other supporting infrastructure
•
•
Baku – Tbilisi Kars new railroad line
Railway modernization project
•
Tbilisi International Airport
•
2nd runway to be constructed
•
International Cargo terminal
•
Anaklia deep water Black Sea port
•
Strategic location
•
Capable of accommodating Panamax
type cargo vessels
•
High capacity – up to 100mln tons
turnover annually
•
Up to USD 1bln for first phase (out of 9)
in Georgia
Maritime
Association Agreement
Agenda
Promoting Open Governance
Improvement of public
services offered to the
private sector
•
•
Creation of “Front Office”
Application of “Single Window Principle”
Involvement of the private
sector in legislative process
•
Discussion of draft legislation at an early stage
Strict monitoring of
implementation of
government decisions
•
Creation of a special unit for monitoring purposes
Education Reform
•
Maximising quality of teaching in secondary
schools
Fundamental Reform of
Higher Education
•
Based on the comprehensive research of the labor
market needs
Improvement of Vocational
Education
•
Increase involvement of the private sector in the
professional education
General Education Reform
76
Diversified resilient economy
Gross domestic product
Diversified nominal GDP structure, 2016
Real GDP growth was 5.0% in 1Q17 based on rapid estimates
20
12.6%
9.6% 9.4%
11.1%
15
10
Hotels &
restaurants
2.8%
Financial interm.
4.0%
16%
12%
6.2%
5.8%
7.2%
6.4%
Healthcare
5.8%
8%
4.6%
3.4%
2.4%
5
2.9% 2.7%
4%
0
Industry
17.1%
Other
10.7%
Real estate
6.6%
Trade
16.3%
0%
-3.7%
Construction
8.3%
Nominal GDP, US$ mn
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Real GDP growth, %
Source: Geostat
Source: Geostat
Sources: IMF
3,159 2,694 2,951
Nominal GDP per capita, US$
4,267 4,428
3,762 3,842
3,711 4,131
2016E
2,479
2015
Turkey
Georgia
Armenia
Poland
Moldova
Romania
Lithuania
Russia
Czech Republic
Latvia
Estonia
Ukraine
-0.5%
1,522 1,863
924 1,202
5,789 6,125 6,026
10,044
9,210 9,601
2014
0%
-1%
4,944
8,526
2013
1%
3,433 3,778
4,328
8,002
2012
2.1%
3.0%
7,287
2011
1.8%
2.6%
6,568
2010
1.8%
2.3%
4.0%
2009
3%
3.8%
2006
3.7%
4%
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2005
5%
5.0%
2004
4.9%
2003
6%
GDP per capita
2008
Comparative real GDP growth rates, % (2006-2016 average)
2%
Transport &
commun.
10.1%
Agriculture
9.3%
Public
administration
9.1%
2007
2004
-4%
2003
-5
GDP per capita, PPP, US$
Sources: IMF
77
Productivity gains have been the main engine of growth since 2004
Overall contribution of capital, labour, and Total Factor
Productivity (TFP) to growth, 1999-2012
Contributions of capital, labour, and TFP to growth during
periods
10%
Capital stock
1.60%
8%
6%
TFP growth
3.65%
6.32%
3.86%
4%
3.65%
2%
1.48%
2.25%
1999-2003
2004-2007
0%
-2%
0.67%
-2.02%
1.56%
2008-2009
2010-2012
-4%
Labor force
0.32%
Capital stock
Labor force
TFP growth
Source: Georgia Rising (2013), WB
Source: Georgia Rising (2013), WB
Real GDP growth projection, 2017
4%
Georgia vs. CIS, effects of 2014-15 commodity price shock
3.5%
2.9%
3%
2.9%
2.8%
2.5%
2.5%
2.5%
4%
8%
3%
6%
6%
2%
4%
4%
2%
2%
0%
0%
-2%
-2%
2.0%
2%
1.4%
1%
1%
0%
0%
8%
Positive growth maintained,
prospects for higher growth
-1%
Azerbaijan
Russia
Ukraine
Turkey
Kazakhstan
Estonia
Lithuania
Bulgaria
Armenia
Georgia
Sources: IMF, April 2017
Belarus
-0.8%
-1%
Georgia, real GDP growth
CIS, real GDP growth
-4%
-4%
2012
2013
2014
2015
2016
2017
2018
Sources: IMF, April 2017
78
Further job creation is achievable
Unemployment rate down 0.4ppts y/y to 12.0% in 2015
Average monthly wages and income per household
1200
4%
1100
2%
1000
0%
2004
2005
2006
2007
2008
Employment (thousands)
2009
2010
2011
2012
2013
2014
200
100
0
2015
2015
6%
2014
1300
300
2013
8%
2012
10%
1400
2011
1500
400
2010
12%
2009
14%
1600
2008
1700
500
2007
16%
2006
1800
2005
18%
2004
1900
Wages, US$
Total income, US$
Unemployment rate
Sources: GeoStat
Sources: GeoStat
Share of services in total employment has increased
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Hired workers account for 42.3% in total employment in 2015
800
700
600
500
400
300
200
Services
Agriculture
Industry
Source: GeoStat
Note: services include construction
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
100
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Public sector (hired workers)
Non-public sector (hired workers)
Sources: GeoStat
79
Low public debt
Fiscal deficit
Breakdown of public debt
0%
-0.3%
-2%
-1.8%
Domestic
21%
-6.5%
-6.7%
External
79%
(Contractual maturity
23 years)
2017F
2016
2015
2014
Bilateral
13%
Eurobond
9%
Fiscal deficit as % of GDP
Source: Ministry of Finance of Georgia
Note: Deficit calculated based on IMF’s GFSM-1986 methodology
Source: Ministry of Finance of Georgia, as of end-2016
Public debt as % of GDP
Gross government debt/GDP, 2016
Sources: Ministry of Finance of Georgia, Geostat
Italy
Portugal
UK
Canada
Croatia
Ukraine
Slovenia
Serbia
Albania
Poland
Montenegro
Belarus
Slovak Rep.
Georgia
Armenia
Lithuania
Moldova
Romania
Latvia
Turkey
Bosnia & Herz.
External public debt to GDP, %
44.9%
Czech Rep.
Total public debt to GDP, %
2017F
0%
2016
20%
0%
2015
10%
0%
2014
10%
2013
40%
2012
60%
20%
2011
30%
20%
2010
30%
2009
80%
2008
40%
2007
40%
2006
100%
2005
120%
50%
2004
60%
Bulgaria
140%
50%
2003
60%
70%
Russia
Public debt/GDP
capped at 60%
Kazakhstan
70%
Hungary
2013
2012
2011
2010
2009
2008
2007
2006
2005
2003
2004
-9.2%
-10%
USA
-8%
Singapore
-4.8%
External public debt
portfolio
weighted average
interest rate 1.9%
Multilateral
57%
Spain
-6%
-2.8%-2.6%-3.2%
-3.6%
-3.7%-4.1%-4.1%
France
-2.6%
-3.4%
-4%
Source: IMF
80
Investing in infrastructure and spending low on social
Revenues and expenditures, consolidated budget
Current and capital expenditure
14,000
70%
12,000
60%
10,000
50%
8,000
40%
60%
30%
40%
31.0%
29.3%
10%
2,000
0%
2009
2010
2011
2012
2013
Total Budget Receipts, GEL mn
Expenditures (capital + current) as % of GDP
2014
2015
2016
27.6%
26.7%
20.1%
18.4%
79.9%
22.0%
20.1%
75.9%
24.1%
20%
0%
2009
0
24.1%
20.2%
20%
78.0%
2017F
2017F
30.4%
81.6%
2016
30.2%
79.9%
2015
29.3%
73.3%
2014
30.6%
72.4%
2013
30.7%
75.9%
2012
33.9%
79.8%
2011
37.2%
4,000
Capital Expenditures and net Lending
80%
2010
6,000
Current Expenditures
100%
Expenditures (Capital + Current), GEL mn
Source: Ministry of Finance, GeoStat
Sources: Ministry of Finance
Government social expenditure as % of GDP
Government capital expenditure as % of GDP
20%
8%
18%
7%
16%
6%
14%
5%
12%
10%
4%
8%
3%
6%
Georgia
Belarus
Bulgaria
Estonia
Hungary
Russia
Croatia
Poland
Armenia
Poland
Croatia
Bulgaria
Russia
Hungary
Estonia
Lithuania
Belarus
Lithuania
2014E
2015E
2016F
Georgia
0%
Armenia
1%
0%
Turkey
2%
Turkey
2%
4%
2014E
2015E
2016F Source: IMF
Source: IMF
81
Fiscal Performance
Consolidated budget tax revenues, GEL mn
1,200
Consolidated budget tax revenues breakdown, 4M17
1,200
+12.3%
1,000
800
Other taxes
2.3%
Corporate income
tax
10.7%
1,000
+18.7%
+26.3%
800
+11.7%
600
600
400
400
200
200
0
Feb
Mar
2015
2016
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Personal income
tax
31.6%
Dec
2017
Source: Ministry of Finance
VAT
39.8%
Excise tax
13.9%
0
Jan
Property tax
Customs duties
1.0%
0.8%
Sources: Ministry of Finance
Consolidated budget balance
500
Consolidated budget revenues above budgeted in 1Q17
3,000
457.1
450
2,500
400
2,624
2,418
343.9
350
2,000
300
250
200
1,500
190.5
1,000
150
67.2
100
500
50
0
0
Operating Balance, GEL mn
1Q16
Source: Ministry of Finance
1Q17 plan
Overall Balance, GEL mn
1Q17 actual
1Q17
Source: Ministry of Finance
82
Diversified foreign trade
Imports of goods and services
Exports of goods and services
12
8.0
10.0
10
9.1
7.5
8
5.9
0.7
4.0
4.0
7.0
6.6
2.0
5.0
1.0
0.0
0
2007
2008
Goods imports, US$ bln
2009
2010
2011
2012
2013
2014
2015
2016
2.2
0.1
0.2
0.0
0.7
0.5
0.1
1.0
1.3
1.4
0.6
0.7
0.9
1.1
1.3
2003
2004
2005
2006
2007
2008
1.3
Serveces exports, US$ bln
Services imports, US$ bln
Source: NBG – BOP statistics
3.1
2.6
2.5
2.6
3.0
3.0
3.2
3.4
2012
2013
2014
2015
2016
2.5
1.3
1.6
2.0
2009
2010
2011
Re-exports, US$ bln
Oil imports
Other
21.9%
Uzbekistan
3.4%
75%
600
50%
300
25%
Azerbaijan
7.3%
-25%
-600
-50%
Oil imports, US$ mn
2016
Turkey
8.2%
-300
2015
China
8.0%
0%
2014
Switzerland
3.9%
Sources: GeoStat
900
0
Russia
9.8%
Armenia
7.1%
100%
EU 27.0%
Ukraine
3.5%
Turkey
18.7%
Oil imports stood at US$ 618.7mln, down 6.1% y-o-y in 2016
2013
Ukraine
5.8%
Sources: GeoStat
6.2
0.3
3.1
2012
EU 30.3%
Russia
9.3%
6.2
0.4
2.5
0.5
Goods exports, Geo-originated, US$ bln
2003
Other
18.5%
China
7.6%
0.9
1.6
Exports, 2016
1,200
Azerbaijan
6.8%
1.1
Source:, NBG – BOP statistics
Imports, 2016
Armenia
3.0%
7.0
1.9
2.1
1.8
7.2
0.9
2011
2006
1.6
3.2
0.2
2010
2005
2.5
3.0
8.3
7.7
7.7
3.7
0.3
3.2
0.2
2009
2004
3.6
5.0
2008
2003
4.3
1.7
1.1
6.7
6.2
2.6
1.7
1.0
4.9
5.2
2007
2.0
0.9
6.0
1.6
1.4
1.3
6.0
8.4
2006
3.3
0.6
2.5
0.5
1.8
0.4
1.4
4.4
0.7
6.1
5.2
8.7
1.7
2005
4
1.2
9.3
2004
6
2
8.0
7.0
Oil imports, % change, y/y
Sources: GeoStat
83
Diversified sources of capital
Strong foreign investor interest
Tourist arrivals and revenues on the rise
FDI stood at US$ 1,645mln, up 5.2% y/y in 2016
25%
2.5
19.8%
2.0
20%
12.2%
8.5%
1.0
10.7% 11.2% 11.5%
9.7%
7.7%
6.1% 7.0%
5.8% 5.8%
7.0%
4,000
10%
3,000
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
0%
2005
0.0
2004
5%
6,351
2,822
2,032
2,000
1,000
5,898
4,428
5,000
15%
0.5
2003
5,392 5,516
6,000
15.3%
1.5
7,000
6.4mln visitors in 2016, up 7.6% y/y
Net tourism revenues up 10.8% y/y to US$ 1,780 mln in 2016
763
313 368 560
146
73
29
17
1,500
1,052 1,290
208 243 294
460
741
1,780
1,489 1,606
1,155 1,426
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Foreign visitors (thousand persons)
FDI, US$ bn
Net tourist revenue (US$ mn)
FDI as a % of GDP
Sources: Georgian National Tourism Agency, National Bank of Georgia
Sources: GeoStat
Remittances - steady source of external funding
Donor funding for public infrastructure projects
US$ 957.2mln in 2016, up 5.3% y/y
Source: National Bank of Georgia
32
63
57
89
79
94
273
287
256
321
2016
0
13
77
49
3
72
302
2015
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Net remittances, US$ mn
Net remittances as % of GDP
100
382
92
2014
315
0
252
92
2013
165.81 213
420
259
200
105
159
87
2012
200
182
121
2011
400
148
2010
909
767
300
2009
918
755
600
957
124
400
2008
949
500
2007
4.9%
4.2% 4.2%
1,263
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
2006
800
1,168 1,226
5.4%
6.5% 6.7%
2005
1,000
1,322
2004
7.4% 7.2% 7.1%
1,200
2003
1,400
600
8.2%
8.2% 8.1%
7.7%
7.6%
Investment projects, credits, US$ mn
Investment projects, grants, US$ mn
Source: Ministry of Finance of Georgia
84
Current account deficit supported by FDI
Current account balance (% of nominal GDP)
Tourism revenues on the rise
30%
16%
15%
20%
9%
8%
Current transfers - steady source of
external funding
8%
11%
10%
6%
6%
6.2%
2009
2010
2011
5.1%
3.9%
8.2%
9.1%
10.0%
2014
2015
2016
-10.7%
-12.0%
-13.3%
0%
2003
2004
-10%
-9.7%
-20%
-30%
2005
2006
2007
2008
2012
2013
-5.8%
-7.0%
-10.5%
-11.1%
-10.3%
-19.8%
Trade deficit driven by FDI
-11.7%
-12.8%
-15.1%
-22.0%
-40%
Goods, net
Services, net
Income, net
Transfers, net
CA deficit
net FDI
Sources: GeoStat, NBG
FDI and capital goods import
19.8%
3.5
15.3%
11.5%
10.7%11.2%
9.1%
2.8
2.5
2.3
0.1 0.1 0.1 0.2 0.2 0.2
0.4 0.5
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0.0
2001
2016
0.5
1.5
0.9
1.0
2000
7.7% 8.4%
1999
7.0%
2015
2010
2008
2007
2006
2005
2004
2009
5.9% 6.0%
5.2% 5.6% 5.8%
7.6%8.4%
1.4
1.5
2014
7.9% 8.2% 7.9%
2.1
2.7
2.0
7.7% 5.8% 5.8%
2013
6.1%
7.0%
2012
7.0%
2.5
1998
9.7%
2011
8.5%
2.8 2.9 2.8
3.0
12.2%
2003
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Building international reserves
FDI to GDP, %
Capital goods imports to GDP, %
Source: GeoStat
Source: NBG
85
Inflation targeting since 2009
Annual inflation
Monthly inflation rate
Jan-17
Mar-17
Nov-16
Jul-16
Sep-16
Mar-16
May-16
Jan-16
-1.5%
Nov-15
-1.0%
-1.5%
Jul-15
-0.5%
-1.0%
Sep-15
0.0%
-0.5%
Mar-15
0.5%
0.0%
May-15
1.0%
0.5%
Jan-15
1.5%
1.0%
Nov-14
2.0%
1.5%
Jul-14
2.5%
2.0%
Sep-14
3.0%
2.5%
Mar-14
3.5%
3.0%
May-14
3.5%
Jan-14
Jan-17
Nov-16
Sep-16
Jul-16
May-16
Mar-16
Jan-16
Nov-15
Jul-15
Sep-15
May-15
Jan-15
Mar-15
Nov-14
Jul-14
Sep-14
Mar-14
May-14
Jan-14
Core (non-food, non-energy)
Mar-17
9%
8%
7%
5.4%
6%
5%
4%
3%
2.9% 2%
1%
0%
-1%
-2%
-3%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
Headline Inflation
Sources: GeoStat
Sources: GeoStat
World commodity prices indices
Average inflation rate
240
240
200
200
160
160
120
120
6%
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
0%
-1%
-1%
Total
Source: IMF
Note: Jan2005=100
Non-energy
Energy
Mar-17
Jan-17
Nov-16
Sep-16
Jul-16
May-16
Mar-16
Jan-16
Sep-15
Nov-15
Jul-15
Mar-15
May-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-17
Jan-17
Nov-16
Sep-16
Jul-16
May-16
Mar-16
Jan-16
Sep-15
Nov-15
Jul-15
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Jan-14
40
Mar-14
40
Mar-14
80
Jan-14
80
6%
Source: GeoStat
86
Jan-14
Source: NBG
Gross International Reserves, US$ bn
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
-150
0.0
0.0
-200
Sources: NBG
9%
9%
8%
8%
7%
7%
6%
6%
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
0%
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
Mar-17
Jan-17
Nov-16
Sep-16
Jul-16
May-16
Mar-16
Jan-16
Nov-15
Sep-15
Jul-15
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
2.5
-100
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
International reserves-sufficient to finance more than 3 months of imports
International reserves
Central Bank’s interventions
3.5
3.5
250 220
3.0
3.0
200
Net Foreign Assets, US$ bn
Monetary policy rate
US$ sale
150
120
100
50
4040
NBG purchased US$ 19.8mln YTD
4040
-80
-120
Loan Dollarization
60
27202020
-50
100
60
-15
-40
40
0
-63
-20
US$ purchase
-140
Sources: NBG
NBG monthly net interventions US$ mn
Dollarization
80%
80%
75%
75%
70%
70%
65%
65%
60%
60%
55%
55%
Source: NBG
Deposit Dollarization
87
Floating exchange rate - Policy priority
Real effective exchange rate (REER)
FX reserves
1.4
3.5
3.0
2.5
0.9
1.0
1.1
1.2
1.3
1.2
1.3
1.2
2.8
2.0
2.1
1.4
1.3
1.3
2.8
2.7
1.0
1.4
0.5
2.3
2.8
0.4
125
120
120
115
115
110
110
105
105
100
100
0.4
95
95
0.2
90
90
0.0
85
85
1.2
0.8
0.6
1.5
0.9
0.2
130
125
1.0
2.5
1.5
1.0
135
130
1.4
1.2
2.9
135
1.6
0.5
0.0
Official FX reserves, US$ bn
Jan-03
Jun-03
Nov-03
Apr-04
Sep-04
Feb-05
Jul-05
Dec-05
May-06
Oct-06
Mar-07
Aug-07
Jan-08
Jun-08
Nov-08
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
Jul-15
Dec-15
May-16
Oct-16
Mar-17
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
M2 multiplier
Sources: NBG
Sources: NBG Jan2003=100
M2 and annual inflation
Lari deppriciation
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
Lari appreciation
Jan-03
Jun-03
Nov-03
Apr-04
Sep-04
Feb-05
Jul-05
Dec-05
May-06
Oct-06
Mar-07
Aug-07
Jan-08
Jun-08
Nov-08
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
Jul-15
Dec-15
May-16
Oct-16
Mar-17
-30%
M2, % change, y/y (LHS)
Source: NBG
Annual inflation, eop (RHS)
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
40%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
Lari deppriciation
30%
20%
10%
0%
-10%
-20%
Lari appreciation
-30%
-40%
Jan-03
Jun-03
Nov-03
Apr-04
Sep-04
Feb-05
Jul-05
Dec-05
May-06
Oct-06
Mar-07
Aug-07
Jan-08
Jun-08
Nov-08
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
Jul-15
Dec-15
May-16
Oct-16
Mar-17
70%
M2 and USD/GEL
M2 % change, y/y (LHS)
USD/GEL % change, y/y (RHS)
Source: NBG
88
Growing and well capitalized banking sector
Summary
•
Prudent regulation ensuring financial stability
− High level of liquidity requirements from NBG at 30% of liabilities, resulting in banking sector liquid assets to client
deposits of 40% as of Dec 2016
•
Resilient banking sector
− Demonstrated strong resilience towards both domestic and external shocks without single bank going
bankrupt
− No nationalization of the banks and no government ownership since 1994
− Very low leverage with retail loans estimated at 28% of GDP and total loans at 54% of GDP as of 2016 resulting
in low number of defaults in face of different shocks to the economy
Source: National Bank of Georgia, GeoStat
Banking sector assets, loans and deposits
NPLs to Gross loans (%), 2016
27.1% CAGR
35
30.1
30
25.2
25
20.6
20
17.3
15
12.7
10
5
0
2.51.7
1.30.8 1.70.9
0.7
1.3
1.0
2003
2004
2005
Assets, GEL bn
4.2
2.7
2.1
2006
7.2
4.6
3.2
10.6
8.9
8.3
6.0
3.6
2007 2008
Loans, GEL bn
14.4
5.2
4.0
2009
6.35.5
2010
7.7
6.7
2011
8.7
7.6
2012
10.5
9.7
13.0
11.6
2013 2014
16.0
14.3
2015
18.9
17.0
2016
Turkey
Georgia
Latvia
Poland
Lithuania
Macedonia
Hungary
Russia
Romania
Bosnia & Herz.
Belarus
Croatia
Moldova
3.2
3.4
3.7
4.0
4.9
7.1
7.4
9.6
10.0
11.8
14.3
14.5
16.3
Deposits, GEL bn
Source: IMF
Note: As of 4Q16 for Georgia, Moldova, Romania, Hungary, Poland and Latvia; rest provided as of 3Q16
Source: NBG
Source: National Bank of Georgia
89
Underpenetrated retail banking sector provides room for further growth
Corporate loans to GDP
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Households loans to GDP
22%
9%
8%
6%
7%
6%
10%
6%
13%
6%
6%
8%
10%
10%
17%
17%
17%
17%
18%
15%
15%
15%
18%
20%
22%
24%
25%
26%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
External corporate indebtedness to GDP
Bulgaria
Georgia
Turkey
Latvia
Lithuania
Russia
Serbia
Estonia
Source: IMF, Central Banks
3%
4%
6%
9%
13%
11%
11%
13%
14%
21%
24%
28%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: NBG, GeoStat
Georgian banks better placed due to sound financials
Banking Sector loans to GDP, 2016
Armenia
3%
18%
Banking sector corporate loans to GDP
Source: NBG, GeoStat
Ukraine
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
41.4%
48.1%
Country
Fitch
Rating Outlook
Sector Outlook
Armenia
B+
Stable
Negative
Azerbaijan
BB+
Negative
Negative
Belarus
B-
Stable
Negative
Georgia
BB-
Stable
Stable
Kazakhstan
BBB
Stable
Negative
Russia
BBB-
Stable
Negative
Ukraine
CCC
None
Negative
53.2%
55.7%
56.9%
57.9%
62.1%
64.6%
74.7%
84.9%
Source: Fitch
90
Flexible FX regime shielded reserves and supported to macro stability
Currency weakening vs. US$
Georgia used less reserves to support GEL
53.8%
40.3%
41.4%
53.9%
2.7%
10%
1.2%
0%
0%
45.0%
-10%
35.9%
28.0%
10%
-12.8%
-20%
28.4%
-10%
-4.5%
23.5%
-19.5%
-21.2%
-30%
-27.3%
-40%
16.1%
-20%
-19.4%
-30%
-40%
Reserve loss/gain, %
-50%
-50%
-60%
-60%
-64.4%
Source: Bloomberg
Note: US$ per unit of national currency, period 1-Aug-2014 – 24-Apr-2017
End-2015
End-2016
Azerbaijan
Belarus
Russia
Turkey
Moldova
Armenia
Kazakhstan
Ukraine
-70%
Source: IMF
Note: Feb-2017 vs Aug-2014; Armenia’s reserves exclude a US$ 500mn Eurobond issued in March 2015
… and monetary policy rate remains low vs. peers
inflation remains low in Georgia…
30%
Latest-2017
End-2015
End-2016
Latest-2017
25%
4.3%
5.1%
5.4%
6.4%
13.2%
15.1%
10%
7.7%
6.0%
6.8%
8.0%
9.0%
9.8%
15.0%
15.0%
Azerbaijan
11.3%
14.0%
Belarus
15%
Ukraine
20%
11.0%
5%
Kazakhstan
Russia
Moldova
Turkey
Georgia
Ukraine
Azerbaijan
Turkey
Kazakhstan
Belarus
Georgia
Moldova
Russia
Source: National Statistics Offices
Armenia
0%
-0.2%
Armenia
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
-5%
Georgia
Azerbaijan
Ukraine
Belarus
Kazakhstan
Turkey
Russia
Georgia
Moldova
Euro
Armenia
-70%
Source: Central banks
91
Recent trend– Tourist arrivals/revenues, exports, and remittances up
Remittances up from all major countries
Tourist arrivals continue strong growth
40%
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
Tourist arrivals, mn persons
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
-0.4
60%
50%
40%
23.5% 30%
20%
10%
0%
-10%
-20%
-30%
-40%
140
120
100
80
60
40
20
0
-20
-40
-60
-80
Other arrivals, mn persons
Remittances, US$ mn
Tourist arrivals, % change y/y
% change, y/y
Source: NBG
Source: GNTA
Trade deficit up since Apr-16 as imports recovered from low
base
Exports up since September 2016
50%
300
36.4% 40%
200
30%
30%
30%
20%
20%
18%
16% 16%
12%
10%
7%
10%
8%
12%
10%10% 13%
2%
20%
10%
0
0%
-10%
-100
-20%
-200
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
-300
Source: GeoStat
Exports, US$ mn
% change y/y, exports
2%
0%
0%
0%
-6%
-10%
-3%
-10%
-20%
-30%
-30%
-40%
-40%
10%
-16%
-18%
-27%
-14%
-26%
-11%
-22%
-25%
-35%
-10%
-20%
-30%
-40%
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
100
20%
Source: GeoStat
92
CONTENT
BGEO Group | Overview
4
Results Discussion | BGEO Group
14
Results Discussion | Banking Business
20
Results Discussion | Investment Business
47
Georgian Macro Overview
73
Appendices
94
93
BGEO
Income Statement – Quarterly
BGEO Consolidated
GEL thousands, unless otherwise noted
Banking interest income
Banking interest expense
Net banking interest income
Fee and commission income
Fee and commission expense
Net fee and commission income
Net banking foreign currency gain
Net other banking income
Net insurance premiums earned
Net insurance claims incurred
Gross insurance profit
Healthcare and pharmacy revenue
Cost of healthcare and pharmacy services
Gross healthcare and pharmacy profit
Real estate revenue
Cost of real estate
Gross real estate profit
Utility revenue
Cost of utility
Gross utility profit
Gross other investment profit
Revenue
Salaries and other employee benefits
Administrative expenses
Banking depreciation and amortisation
Other operating expenses
Operating expenses
Operating income before cost of credit risk /
EBITDA
Profit from associates
Depreciation and amortization of investment
business
Net foreign currency gain from investment
business
Interest income from investment business
Interest expense from investment business
Operating income before cost of credit risk
Impairment charge on loans to customers
Impairment charge on finance lease receivables
Impairment charge on other assets and
provisions
Cost of credit risk
Net operating income before non-recurring
items
Net non-recurring items
Profit before income tax
Income tax expense
Profit
Attributable to:
– shareholders of BGEO
– non-controlling interests
Earnings per share basic
Earnings per share diluted
Banking Business
4Q16
Change
q-o-q
1Q17
1Q16
Change
y-o-y
Investment Business
4Q16
Change
q-o-q
1Q17
1Q16
Change
y-o-y
Eliminations
1Q17
1Q16
Change
y-o-y
4Q16
Change
q-o-q
1Q17
1Q16
4Q16
265,662
(104,996)
160,666
43,267
(13,382)
29,885
19,274
3,006
25,795
(15,572)
10,223
172,131
(119,789)
52,342
19,893
(17,192)
2,701
27,153
(9,709)
17,444
3,993
299,534
(67,531)
(42,733)
(9,759)
(951)
(120,974)
178,560
224,810
(95,958)
128,852
38,149
(10,335)
27,814
17,390
2,867
21,824
(15,408)
6,416
58,348
(32,057)
26,291
28,764
(22,786)
5,978
3,606
219,214
(47,413)
(25,016)
(9,138)
(1,675)
(83,242)
135,972
18.2%
9.4%
24.7%
13.4%
29.5%
7.4%
10.8%
4.8%
18.2%
1.1%
59.3%
195.0%
NMF
99.1%
-30.8%
-24.6%
-54.8%
NMF
NMF
NMF
10.7%
36.6%
42.4%
70.8%
6.8%
-43.2%
45.3%
31.3%
256,457
(101,054)
155,403
48,588
(13,263)
35,325
28,516
2,199
26,046
(16,875)
9,171
118,799
(76,578)
42,221
9,813
(8,474)
1,339
31,608
(10,008)
21,600
9,697
305,471
(64,754)
(40,729)
(9,841)
(2,034)
(117,358)
188,113
3.6%
3.9%
3.4%
-11.0%
0.9%
-15.4%
-32.4%
36.7%
-1.0%
-7.7%
11.5%
44.9%
56.4%
24.0%
102.7%
102.9%
101.7%
-14.1%
-3.0%
-19.2%
-58.8%
-1.9%
4.3%
4.9%
-0.8%
-53.2%
3.1%
-5.1%
267,521
(105,874)
161,647
43,663
(13,528)
30,135
19,274
3,095
12,847
(5,637)
7,210
221,361
(46,257)
(23,219)
(9,759)
(761)
(79,996)
141,365
226,217
(95,998)
130,219
38,484
(10,469)
28,015
17,390
3,168
9,550
(4,207)
5,343
184,135
(39,806)
(20,058)
(9,138)
(861)
(69,863)
114,272
18.3%
10.3%
24.1%
13.5%
29.2%
7.6%
10.8%
-2.3%
34.5%
34.0%
34.9%
20.2%
16.2%
15.8%
6.8%
-11.6%
14.5%
23.7%
258,414
(100,043)
158,371
50,135
(13,490)
36,645
28,516
2,506
11,559
(5,114)
6,445
232,483
(50,052)
(25,714)
(9,841)
(1,462)
(87,069)
145,414
3.5%
5.8%
2.1%
-12.9%
0.3%
-17.8%
-32.4%
23.5%
11.1%
10.2%
11.9%
-4.8%
-7.6%
-9.7%
-0.8%
-47.9%
-8.1%
-2.8%
13,872
(9,935)
3,937
172,131
(119,789)
52,342
20,202
(17,192)
3,010
27,236
(9,709)
17,527
3,981
80,797
(22,051)
(20,151)
(190)
(42,392)
38,405
12,924
(11,201)
1,723
58,348
(32,057)
26,291
28,764
(22,786)
5,978
3,675
37,667
(8,250)
(5,346)
(814)
(14,410)
23,257
7.3%
-11.3%
128.5%
195.0%
NMF
99.1%
-29.8%
-24.6%
-49.6%
NMF
NMF
NMF
8.3%
114.5%
167.3%
NMF
-76.7%
194.2%
65.1%
15,318
(11,761)
3,557
118,799
(76,578)
42,221
10,507
(8,474)
2,033
31,679
(10,008)
21,671
9,391
78,873
(15,459)
(16,132)
(572)
(32,163)
46,710
-9.4%
-15.5%
10.7%
44.9%
56.4%
24.0%
92.3%
102.9%
48.1%
-14.0%
-3.0%
-19.1%
-57.6%
2.4%
42.6%
24.9%
-66.8%
31.8%
-17.8%
(1,859)
878
(981)
(396)
146
(250)
(89)
(924)
(924)
(309)
(309)
(83)
(83)
12
(2,624)
777
637
1,414
(1,210)
(1,407)
40
(1,367)
(335)
134
(201)
(301)
(650)
(650)
(69)
(2,588)
643
388
1,031
(1,557)
(1,957)
(1,011)
(2,968)
(1,547)
227
(1,320)
(307)
(831)
(831)
(694)
(694)
(71)
(71)
306
(5,885)
757
1,117
1,874
(4,011)
514
(11,236)
1,866
(4,910)
-72.5%
128.8%
254
(9,615)
102.4%
16.9%
514
-
-
NMF
-
-
NMF
-
(11,236)
1,866
(4,910)
-100.0%
128.8%
254
(9,615)
-100.0%
16.9%
-
-
-
6,955
(766)
NMF
(6,065)
NMF
-
-
-
-
-
6,955
(766)
NMF
(6,065)
NMF
-
-
-
1,420
(10,309)
165,904
(41,341)
(139)
(7,765)
956
(1,382)
131,736
(32,218)
(513)
(3,412)
48.5%
NMF
25.9%
28.3%
-72.9%
127.6%
1,551
(8,673)
165,565
(69,920)
3,124
(3,171)
-8.4%
18.9%
0.2%
-40.9%
NMF
144.9%
141,879
(41,341)
(139)
(6,782)
114,272
(32,218)
(513)
(2,281)
24.2%
28.3%
-72.9%
197.3%
145,414
(69,920)
3,124
(4,077)
-2.4%
-40.9%
NMF
66.3%
2,298
(12,397)
24,025
(983)
964
(2,947)
17,464
(1,131)
138.4%
NMF
37.6%
-13.1%
540
(11,673)
20,151
906
NMF
6.2%
19.2%
NMF
(878)
2,088
-
(8)
1,565
-
1,011
3,000
-
(49,245)
116,659
(36,143)
95,593
36.3%
22.0%
(69,967)
95,598
-29.6%
22.0%
(48,262)
93,617
(35,012)
79,260
37.8%
18.1%
(70,873)
74,541
-31.9%
25.6%
(983)
23,042
(1,131)
16,333
-13.1%
41.1%
906
21,057
NMF
9.4%
-
-
-
(3,371)
113,288
(5,115)
108,173
1,366
96,959
(9,912)
87,047
NMF
16.8%
-48.4%
24.3%
698
96,296
(7,553)
88,743
NMF
17.6%
-32.3%
21.9%
(1,695)
91,922
(5,045)
86,877
(1,419)
77,841
(8,178)
69,663
19.5%
18.1%
-38.3%
24.7%
(1,056)
73,485
1,830
75,315
60.5%
25.1%
NMF
15.4%
(1,676)
21,366
(70)
21,296
2,785
19,118
(1,734)
17,384
NMF
11.8%
-96.0%
22.5%
1,754
22,811
(9,383)
13,428
NMF
-6.3%
-99.3%
58.6%
-
-
-
100,431
7,742
2.64
2.55
80,836
6,211
2.10
2.10
24.2%
24.6%
25.7%
21.4%
87,136
1,607
2.29
2.21
15.3%
381.8%
15.3%
15.4%
86,390
487
68,620
1,043
25.9%
-53.3%
75,871
(556)
13.9%
NMF
14,041
7,255
12,216
5,168
14.9%
40.4%
11,265
2,163
24.6%
235.4%
-
-
-
94
BGEO
Balance Sheet – 31 March 2017
BGEO Consolidated
STATEMENT OF FINANCIAL POSITION
Mar-17
Mar-16
Banking Business
Change
y-o-y
Dec-16
Change
q-o-q
Mar-17
Mar-16
Investment Business
Change
y-o-y
Dec-16
Change
q-o-q
Mar-17
Mar-16
Eliminations
Change
y-o-y
Dec-16
Change
q-o-q
Mar-17
Mar-16
Dec-16
Cash and cash equivalents
1,285,483
1,359,219
-5.4%
1,573,610
-18.3%
1,198,457
1,330,094
-9.9%
1,482,106
-19.1%
353,485
288,512
22.5%
397,620
-11.1%
(266,459)
(259,387)
(306,116)
Amounts due from credit institutions
1,090,111
764,435
42.6%
1,054,983
3.3%
973,787
720,442
35.2%
943,091
3.3%
146,798
47,936
206.2%
153,497
-4.4%
(30,474)
(3,943)
(41,605)
Investment securities
1,231,332
825,045
49.2%
1,286,003
-4.3%
1,231,993
825,821
49.2%
1,287,292
-4.3%
3,306
1,154
186.5%
3,075
7.5%
(3,967)
(1,930)
(4,364)
Loans to customers and finance lease receivables
6,408,711
5,359,718
19.6%
6,648,482
-3.6%
6,470,771
5,394,565
19.9%
6,681,672
-3.2%
-
-
-
-
-
(62,060)
(34,847)
(33,190)
143,417
84,715
69.3%
128,506
11.6%
4,081
5,144
-20.7%
56,495
-92.8%
139,787
81,955
70.6%
125,964
11.0%
(451)
(2,384)
(53,953)
51,595
54,879
-6.0%
46,423
11.1%
22,751
16,567
37.3%
24,152
-5.8%
29,773
39,347
-24.3%
24,284
22.6%
(929)
(1,035)
(2,013)
Prepayments
101,297
67,633
49.8%
76,277
32.8%
28,468
24,649
15.5%
19,607
45.2%
73,055
42,984
70.0%
57,270
27.6%
(226)
-
(600)
Inventories
205,132
125,466
63.5%
188,344
8.9%
9,395
9,686
-3.0%
9,009
4.3%
195,737
115,780
69.1%
179,335
9.1%
-
-
-
Investment property
285,996
254,224
12.5%
288,227
-0.8%
155,463
134,310
15.7%
153,442
1.3%
130,533
119,914
8.9%
134,785
-3.2%
-
-
-
1,388,938
835,651
66.2%
1,323,870
4.9%
342,495
333,243
2.8%
339,442
0.9%
1,046,443
502,408
108.3%
984,428
6.3%
-
-
-
157,824
73,192
115.6%
106,986
47.5%
49,592
49,592
0.0%
49,592
0.0%
108,232
23,600
358.6%
57,394
88.6%
-
-
-
Intangible assets
63,121
43,074
46.5%
58,907
7.2%
43,851
37,609
16.6%
41,350
6.0%
19,270
5,465
252.6%
17,557
9.8%
-
-
-
Income tax assets
11,277
36,712
-69.3%
24,043
-53.1%
8,214
27,321
-69.9%
20,638
-60.2%
3,063
9,391
-67.4%
3,405
-10.0%
-
-
-
182,290
193,626
-5.9%
184,792
-1.4%
139,440
121,012
15.2%
140,338
-0.6%
47,809
75,515
-36.7%
56,312
-15.1%
(4,959)
(2,901)
(11,858)
25.1% 12,989,453
-2.9%
10,678,758
9,030,055
18.3% 11,248,226
-5.1%
69.7% 2,194,926
4.7%
(369,525)
(306,427)
(453,699)
Accounts receivable and other loans
Insurance premiums receivable
Property and equipment
Goodwill
Other assets
Total assets
12,606,524 10,077,589
2,297,291 1,353,961
Client deposits and notes
5,294,462
4,698,558
12.7%
5,382,698
-1.6%
5,591,720
4,962,432
12.7%
5,730,419
-2.4%
-
-
-
-
-
(297,258)
(263,874)
(347,721)
Amounts due to credit institutions
3,133,422
1,719,920
82.2%
3,470,091
-9.7%
2,662,909
1,630,299
63.3%
3,067,651
-13.2%
532,573
124,468
327.9%
435,630
22.3%
(62,060)
(34,847)
(33,190)
Debt securities issued
1,157,082
1,033,758
11.9%
1,255,643
-7.8%
827,024
957,474
-13.6%
858,037
-3.6%
338,292
81,116
317.0%
407,242
-16.9%
(8,234)
(4,832)
(9,636)
Accruals and deferred income
131,372
142,766
-8.0%
130,319
0.8%
30,307
25,685
18.0%
25,242
20.1%
101,065
117,081
-13.7%
158,387
-36.2%
-
-
(53,310)
Insurance contracts liabilities
71,620
71,565
0.1%
67,871
5.5%
43,607
34,630
25.9%
41,542
5.0%
28,013
36,935
-24.2%
26,329
6.4%
-
-
-
Income tax liabilities
17,228
128,667
-86.6%
27,791
-38.0%
16,219
93,765
-82.7%
23,937
-32.2%
1,009
34,902
-97.1%
3,854
-73.8%
-
-
-
165.1%
231,622
50.5%
71,391
47,520
50.2%
72,547
-1.6%
279,167
86,860
221.4%
168,917
65.3%
(1,973)
(2,874)
(9,842)
28.1% 10,566,035
-3.9%
9,243,177
7,751,805
19.2%
9,819,375
-5.9%
1,280,119
481,362
165.9% 1,200,359
6.6%
(369,525)
(306,427)
(453,699)
Other liabilities
348,585
131,506
Total liabilities
10,153,771
7,926,740
Share capital
Additional paid-in capital
Treasury shares
Other reserves
Retained earnings
Total equity attributable to shareholders of the
Group
Non-controlling interests
Total equity
Total liabilities and equity
Book value per share
1,153
1,154
-0.1%
1,154
-0.1%
1,153
1,154
-0.1%
1,154
-0.1%
-
-
-
-
-
-
-
-
177,793
240,962
-26.2%
183,872
-3.3%
38,474
101,467
-62.1%
45,072
-14.6%
139,319
139,495
-0.1%
138,800
0.4%
-
-
-
(40)
(29)
37.9%
(54)
-25.9%
(40)
(29)
37.9%
(54)
-25.9%
-
-
-
-
-
-
-
-
84,162
42,101
99.9%
102,269
-17.7%
(27,031)
(55,166)
-51.0%
(31,116)
-13.1%
111,193
97,267
14.3%
133,385
-16.6%
-
-
-
1,945,830
2,208,898
1,650,094
1,934,282
17.9%
14.2%
1,878,945
2,166,186
3.6%
2.0%
1,416,885
1,429,441
1,212,492
1,259,918
16.9%
13.5%
1,393,117
1,408,173
1.7%
1.5%
528,945
779,457
437,602
674,364
20.9%
15.6%
485,828
758,013
8.9%
2.8%
-
-
-
243,855
216,567
12.6%
257,232
-5.2%
6,140
18,332
-66.5%
20,678
-70.3%
237,715
198,235
19.9%
236,554
0.5%
-
-
-
2,452,753
2,150,849
14.0%
2,423,418
1.2%
1,435,581
1,278,250
12.3%
1,428,851
0.5%
1,017,172
872,599
16.6%
994,567
2.3%
-
-
-
25.1% 12,989,453
-2.9%
10,678,758
9,030,055
18.3% 11,248,226
-5.1%
69.7% 2,194,926
4.7%
(369,525)
(306,427)
(453,699)
12,606,524 10,077,589
58.00
50.21
15.5%
57.52
2,297,291 1,353,961
0.8%
95
GHG
Income Statement – Quarterly
Healthcare services
GEL thousands; unless otherwise noted
Revenue, gross
Corrections & rebates
Revenue, net
Costs of services
Cost of salaries and other employee
benefits
Cost of materials and supplies
Cost of medical service providers
Medical insurance
Pharmacy
Eliminations
GHG
Change
q-o-q
1Q17
1Q16
Change
y-o-y
4Q16
Change
q-o-q
1Q17
4Q16
Change
q-o-q
1Q17
1Q16
4Q16
1Q17
1Q16
Change
y-o-y
4Q16
67,604
-1.6%
13,965
13,830
1.0%
16,312
-14.4%
111,399
56,586
96.9%
(5,265)
(1,705)
(4,471)
186,627
72,576
157.1%
136,031
37.2%
(790)
-21.1%
-
-
-
-
-
-
-
-
-
-
-
(623)
(410)
52.0%
(790)
-21.1%
1Q17
1Q16
Change
y-o-y
4Q16
66,528
60,451
10.1%
(623)
(410)
52.0%
Change
q-o-q
65,905
60,041
9.8%
66,814
-1.4%
13,965
13,830
1.0%
16,312
-14.4%
111,399
56,586
96.9%
(5,265)
(1,705)
(4,471)
186,004
72,166
157.7%
135,241
37.5%
(37,957)
(32,998)
15.0%
(34,802)
9.1%
(12,734)
(12,847)
-0.9%
(14,997)
-15.1%
(84,408)
(44,498)
89.7%
5,173
1,694
4,671
(129,926)
(44,151)
194.3%
(89,626)
45.0%
14.0%
(23,095)
(19,752)
16.9%
(21,042)
9.8%
-
-
-
-
-
-
-
-
855
565
1,534
(22,240)
(19,187)
15.9%
(19,508)
(10,647)
(9,613)
10.8%
(10,616)
0.3%
-
-
-
-
-
-
-
-
1,363
275
761
(9,284)
(9,338)
-0.6%
(9,855)
-5.8%
(372)
(428)
-13.1%
(550)
-32.4%
-
-
-
-
-
-
-
-
14
12
39
(358)
(416)
-13.9%
(511)
-29.9%
(3,843)
(3,205)
19.9%
(2,594)
48.1%
-
-
-
-
-
-
-
-
142
92
189
(3,701)
(3,113)
18.9%
(2,405)
53.9%
Net insurance claims incurred
Agents, brokers and employee
commissions
Cost of pharmacy – wholesale
-
-
-
-
-
(11,812)
(11,953)
-1.2%
(13,911)
-15.1%
-
-
-
2,799
750
2,148
(9,013)
(11,203)
-19.5%
(11,763)
-23.4%
-
-
-
-
-
(922)
(894)
3.1%
(1,086)
-15.1%
-
-
-
-
-
-
(922)
(894)
3.1%
(1,086)
-15.1%
-
-
-
-
-
-
-
-
-
-
(22,496)
(13,700)
64.2%
-
-
-
(22,496)
-
-
(13,700)
64.2%
Cost of pharmacy - retail
-
-
-
-
-
-
-
-
-
-
(61,912)
(30,797)
101.0%
-
-
-
(61,912)
-
-
(30,797)
101.0%
Gross profit
27,948
27,043
3.3%
32,012
-12.7%
1,231
983
25.2%
1,315
-6.4%
26,991
12,088
123.3%
(92)
(11)
200
56,078
28,015
100.2%
45,615
22.9%
Salaries and other employee benefits
(7,179)
(6,115)
17.4%
(6,676)
7.5%
(1,048)
(819)
28.0%
(1,320)
-20.6%
(9,616)
(4,561)
110.8%
116
11
(200)
(17,728)
(6,923)
156.1%
(12,757)
39.0%
General and administrative expenses
Impairment of healthcare services,
insurance premiums and other receivables
Other operating income
(4,082)
(2,483)
64.4%
(4,212)
-3.1%
(507)
(719)
-29.5%
(580)
-12.6%
(8,762)
(4,678)
87.3%
-
-
-
(13,352)
(3,202)
317.0%
(9,470)
41.0%
(980)
(858)
14.2%
145
NMF
(113)
(122)
-7.4%
(89)
27.0%
(28)
-
-
-
-
-
(1,121)
(980)
14.4%
56
NMF
1,112
241
361.4%
269
313.4%
(7)
(21)
-66.7%
31
NMF
101
545
-81.5%
(24)
-
-
1,182
220
437.3%
845
39.9%
EBITDA
16,819
17,828
-5.7%
21,538
-21.9%
-36.4%
(643)
-30.9%
8,686
3,394
155.9%
-
-
-
25,059
17,129
46.3%
24,289
3.2%
EBITDA margin
25.3%
29.5%
7.8%
6.0%
-
-
-
-
13.4%
23.6%
Depreciation and amortisation
(4,939)
(4,261)
15.9%
(5,292)
Net interest income (expense)
(4,116)
(2,259)
82.2%
(3,815)
695
(411)
NMF
Net non-recurring income/(expense)
(1,276)
1,968
Profit before income tax expense
7,183
Cost of utilities and other
(444)
(698)
-3.2%
-5.0%
-6.7%
(222)
(204)
8.8%
(226)
-1.8%
(711)
202
NMF
-
-
-
(5,872)
(4,465)
31.5%
(5,316)
10.5%
7.9%
(210)
603
NMF
(242)
-13.2%
(2,793)
(548)
409.7%
-
-
(168)
(7,119)
(1,656)
329.9%
(4,773)
49.2%
(2,053)
NMF
(12)
151
NMF
(189)
-93.7%
2,095
(928)
- NMF
-
-
-
2,778
(260)
NMF
(3,170)
NMF
NMF
2,704
NMF
(200)
-
-
(704)
-71.6%
(316)
(17)
NMF
-
-
-
(1,792)
1,968
NMF
1,982
NMF
12,865
-44.2%
13,082
-45.1%
(1,088)
(149)
NMF
(2,004)
-45.7%
6,961
2,103
231.0%
-
-
(168)
13,054
12,716
2.7%
13,012
0.3%
(11)
(712)
NMF
(5,439)
NMF
-
19
NMF
(845)
NMF
(8)
(398)
NMF
-
-
-
(19)
(693)
NMF
(6,682)
NMF
-
-
-
(4,321)
-
-
-
-
(798)
-
(200)
-
-
-
-
-
-
-
(5,319)
-
7,172
12,153
-41.0%
7,643
-6.2%
(1,088)
(130)
NMF
(2,849)
-61.8%
6,953
1,705
307.8%
-
-
(168)
13,035
12,023
8.4%
6,330
105.9%
- shareholders of the Company
5,764
10,051
-42.7%
6,714
-14.1%
(1,088)
(130)
NMF
(2,849)
-61.8%
4,157
1,705
143.8%
-
-
(168)
8,832
9,921
-11.0%
5,401
63.5%
- non-controlling interests
1,408
2,102
-33.0%
929
51.6%
-
-
-
-
-
2,796
-
-
-
-
-
4,203
2,102
100.0%
929
352.4%
-
-
-
(516)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(516)
-
Net gains/(losses) from foreign currencies
Income tax benefit/(expense)
of which: Deferred tax adjustments
Profit for the period
31.9%
-3.9%
17.9%
Attributable to:
of which: Deferred tax adjustments
The results refer to GHG standalone numbers and are based on GHG’s reported results,
which are published independently and available on GHG’s web-site: www.ghg.com.ge
96
BNB
Belarusky Narodny Bank – Financial data
INCOME STATEMENT, HIGHLIGHTS
1Q17
1Q16
Change
y-o-y
4Q16
Change
q-o-q
8,702
2,350
1,798
109
12,959
(6,400)
6,559
(5,634)
(57)
868
(199)
669
7,903
1,862
2,481
167
12,413
(4,490)
7,923
(2,516)
(3)
5,404
(1,144)
4,260
10.1%
26.2%
-27.5%
-34.7%
4.4%
42.5%
-17.2%
123.9%
NMF
-83.9%
-82.6%
-84.3%
8,043
1,993
2,696
(1,064)
11,668
(6,483)
5,185
(9,163)
(1,402)
(5,380)
1,289
(4,091)
8.2%
17.9%
-33.3%
NMF
11.1%
-1.3%
26.5%
-38.5%
-95.9%
NMF
NMF
NMF
Mar-17
Mar-16
Change
y-o-y
Dec-16
Change
q-o-q
66,619
3,981
335,538
126,727
532,865
235,877
193,494
25,512
5,254
460,137
72,728
72,728
532,865
93,904
3,986
319,740
49,825
467,455
230,848
139,801
15,906
5,409
391,964
62,908
12,583
75,491
467,455
-29.1%
-0.1%
4.9%
154.3%
14.0%
2.2%
38.4%
60.4%
-2.9%
17.4%
15.6%
-100.0%
-3.7%
14.0%
70,211
3,560
362,100
113,261
549,132
233,501
212,495
24,126
5,202
475,324
59,205
14,603
73,808
549,132
-5.1%
11.8%
-7.3%
11.9%
-3.0%
1.0%
-8.9%
5.7%
1.0%
-3.2%
22.8%
-100.0%
-1.5%
-3.0%
GEL thousands, unless otherwise stated
Net banking interest income
Net fee and commission income
Net banking foreign currency gain
Net other banking income
Revenue
Operating expenses
Operating income before cost of credit risk
Cost of credit risk
Net non-recurring items
Profit before income tax
Income tax (expense) benefit
Profit
BALANCE SHEET, HIGHLIGHTS
GEL thousands, unless otherwise stated
Cash and cash equivalents
Amounts due from credit institutions
Loans to customers and finance lease receivables
Other assets
Total assets
Client deposits and notes
Amounts due to credit institutions
Debt securities issued
Other liabilities
Total liabilities
Total equity attributable to shareholders of the Group
Non-controlling interests
Total equity
Total liabilities and equity
97
P&C
Insurance (Aldagi)
INCOME STATEMENT, HIGHLIGHTS
1Q17
1Q16
Change
y-o-y
4Q16
Change
q-o-q
767
99
(425)
223
7,122
7,786
(3,157)
4,629
725
100
(47)
131
5,665
6,574
(2,767)
3,807
5.8%
-1.0%
NMF
70.2%
25.7%
18.4%
14.1%
21.6%
761
128
809
495
6,477
8,670
(3,641)
5,029
0.8%
-22.7%
NMF
-54.9%
10.0%
-10.2%
-13.3%
-8.0%
(242)
4,387
(637)
3,750
(173)
3,634
(545)
3,089
39.9%
20.7%
16.9%
21.4%
(265)
4,764
(953)
3,811
-8.7%
-7.9%
-33.2%
-1.6%
Change
y-o-y
Dec-16
Change
q-o-q
GEL thousands, unless otherwise stated
Net banking interest income
Net fee and commission income
Net banking foreign currency gain
Net other banking income
Gross insurance profit
Revenue
Operating expenses
Operating income before cost of credit risk and non-recurring items
Cost of credit risk
Profit before income tax
Income tax (expense) benefit
Profit
BALANCE SHEET, HIGHLIGHTS
Mar-17
Mar-16
GEL thousands, unless otherwise stated
Cash and cash equivalents
Amounts due from credit institutions
Investment securities
Insurance premiums receivable
Reinsurance assets
Prepayments
Property and equipment
Goodwill
Other assets
Total assets
Accruals and deferred income
Insurance contracts liabilities
Other insurance liabilities
Income tax liabilities
Other liabilities
Total liabilities
Total equity attributable to shareholders of the Group
Total liabilities and equity
6,143
27,450
2,562
23,575
14,998
1,112
9,106
16,139
21,792
122,877
4,197
43,607
8,224
653
19,520
76,201
46,676
122,877
4,003
22,457
2,927
17,407
10,994
759
8,531
16,139
19,233
102,450
3,431
34,630
7,661
101
17,269
63,092
39,358
102,450
53.5%
22.2%
-12.5%
35.4%
36.4%
46.5%
6.7%
0.0%
13.3%
19.9%
22.3%
25.9%
7.3%
NMF
13.0%
20.8%
18.6%
19.9%
4,349
24,928
3,389
24,713
13,161
892
9,139
16,139
21,739
118,449
3,506
41,542
8,235
1,335
20,923
75,541
42,908
118,449
41.3%
10.1%
-24.4%
-4.6%
14.0%
24.7%
-0.4%
0.0%
0.2%
3.7%
19.7%
5.0%
-0.1%
-51.1%
-6.7%
0.9%
8.8%
3.7%
98
P&C
•
•
Insurance (Aldagi)
Aldagi provides a wide range of P&C
insurance services including Motor, Property,
Life and Agro
Gross revenue (GELmln)
67.8
The Company is a leading player in the
Georgian P&C insurance market, with a
market share of 35% by revenue in 20161
71.0
51.3
44.0
42.8
Combined ratio
75%
40%
79%
72%
37%
36%
36.7
•
Covers more than 700,000 insured customers
14.6
•
•
2014
Aldagi has a limited dependence on Bank of
Georgia with only ~15% of revenue coming
through the bank
Most profitable insurance company in the
market:
•
Aldagi generated 74% of insurance
industry profit in 20161
•
Loss ratio of 36% vs. 42% in the
market
Profit
margin
23%
2016
35%
42%
36%
2014
Loss ratio
2015
2016
Expense Ratio
24%
ROAE
27%
37%
13.8
38%
35%
11.2
8.5
6.3
4.1
3.3
Employs 293 full time employees
2015
Retail
Corporate
28.2
Profitability (GELmln)
7.4
•
23.8
2014
4.9
5.3
2015
2016
Retail
Corporate
2014
2015
2016
1. As per Insurance State Supervision Service Agency of Georgia.
99
Banking Business
Key ratios
BANKING BUSINESS KEY RATIOS
1Q17
1Q16
4Q16
Profitability
ROAA, Annualised
ROAE, Annualised
RB ROAE
CIB ROAE
Net Interest Margin, Annualised
RB NIM
CIB NIM
Loan Yield, Annualised
RB Loan Yield
CIB Loan Yield
Liquid assets yield, Annualised
Cost of Funds, Annualised
Cost of Client Deposits and Notes, annualised
RB Cost of Client Deposits and Notes
CIB Cost of Client Deposits and Notes
Cost of Amounts Due to Credit Institutions, annualised
Cost of Debt Securities Issued
Operating Leverage, Y-O-Y
Operating Leverage, Q-O-Q
3.2%
23.5%
27.2%
18.3%
7.4%
8.8%
3.4%
14.0%
15.9%
10.7%
3.4%
4.6%
3.5%
3.0%
3.9%
6.3%
6.0%
5.7%
3.3%
3.0%
21.2%
24.3%
17.6%
7.5%
9.2%
3.7%
14.4%
17.4%
10.3%
3.1%
5.0%
4.3%
3.5%
4.5%
6.0%
7.2%
-3.3%
-6.6%
2.9%
20.1%
35.8%
6.1%
7.6%
9.3%
3.6%
14.4%
16.4%
11.1%
3.3%
4.6%
3.5%
3.1%
3.6%
6.4%
6.1%
-6.8%
-0.3%
Efficiency
Cost / Income
RB Cost / Income
CIB Cost / Income
36.1%
37.6%
30.1%
37.9%
43.3%
27.0%
37.5%
38.8%
28.7%
37.4%
36.8%
115.7%
96.1%
6.4
47.3%
37.1%
108.7%
91.6%
6.1
37.7%
37.8%
116.6%
95.3%
6.9
311,940
4.6%
87.1%
126.9%
251,959
4.5%
86.0%
122.6%
294,787
4.2%
86.7%
132.1%
2.4%
3.4%
0.3%
2.3%
2.5%
2.1%
4.2%
2.0%
6.6%
11.2%
16.3%
10.1%
15.8%
10.1%
15.4%
Liquidity
NBG Liquidity Ratio
Liquid Assets To Total Liabilities
Net Loans To Client Deposits and Notes
Net Loans To Client Deposits and Notes + DFIs
Leverage (Times)
Asset Quality
NPLs (in GEL)
NPLs To Gross Loans To Clients
NPL Coverage Ratio
NPL Coverage Ratio, Adjusted for discounted value of
collateral
Cost of Risk, Annualised
RB Cost of Risk
CIB Cost of Risk
Capital Adequacy
New NBG (Basel 2/3) Tier I Capital Adequacy Ratio2
New NBG (Basel 2/3) Total Capital Adequacy Ratio2
1Note:
for the description of Key ratios, refer to slide 108
2Note: Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for regular
dividends in respect of the 2016 financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO’s AGM. Excluding this amount, NBG (Basel 2/3)
Tier I and Total CAR would be 10.1% and 15.2%, respectively at 31 March 2017 and 9.1% and 14.4%, respectively, at 31 December 2016.
100
Key operating data
1Q17
Selected Operating Data:
Total Assets Per FTE, BOG Standalone
Number Of Active Branches, Of Which:
- Express Branches (including Metro)
- Bank of Georgia Branches
- Solo Lounges
Number Of ATMs
Number Of Cards Outstanding, Of Which:
- Debit cards
- Credit cards
Number Of POS Terminals
FX Rates:
GEL/US$ exchange rate (period-end)
GEL/GBP exchange rate (period-end)
Full Time Employees, Group, Of Which:
Total Banking Business Companies, of which:
- Full Time Employees, BOG Standalone
- Full Time Employees, BNB
- Full Time Employees, Aldagi
- Full Time Employees, BB other
Total Investment Business Companies, of which:
- Full Time Employees, Georgia Healthcare Group
- Full Time Employees, GGU
- Full Time Employees, m2
- Full Time Employees, IB Other
Shares Outstanding
1Q16
4Q16
2,060
1,972
2,242
279
266
278
130
114
128
138
144
139
11
8
11
813
753
801
2,099,488
1,943,175
2,056,258
1,307,135
1,171,454
1,255,637
792,353
771,721
800,621
10,774
8,175
10,357
2.4452
3.0418
2.3679
3.4110
2.6468
3.2579
Mar-17
Mar-16
Dec-16
24,091
6,898
5,183
622
293
800
17,193
14,510
2,373
84
226
16,086
6,183
4,580
562
259
782
9,903
9,675
59
169
22,080
6,720
5,016
611
289
804
15,360
12,720
2,379
80
181
Mar-17
Mar-16
Dec-16
Ordinary Shares Outstanding
Treasury Shares Outstanding
38,085,220
38,523,409
37,657,229
1,384,100
976,911
1,843,091
Total Shares Outstanding
39,469,320
39,500,320
39,500,320
Risk Weighted Assets
Risk Weighted Assets breakdown
Change
Y-O-Y, %
Q-O-Q, %
31-Mar-17
31-Dec-16
31-Mar-16
Credit risk weighting
6,668,402
6,902,208
5,843,131
14.1%
-3.4%
FX induced credit risk (market risk)
1,934,292
2,148,527
1,711,883
13.0%
-10.0%
Operational risk weighting
Total RWA under NBG Basel 2/3
864,442
739,547
739,547
16.9%
16.9%
9,467,136
9,790,282
8,294,561
14.1%
-3.3%
101
Analyst coverage
BGEO Group PLC
Share price consensus – GBP 35.69
Bank
Target Price (GBP)
Analyst report date
BoAML
37.80
27-Mar-17
Citi
35.10
1-Dec-16
HSBC
36.00
28-Nov-16
Jefferies
40.00
20-Feb-17
KBW
32.30
20-Feb-17
Numis Securities
35.84
20-Feb-17
Peel Hunt
40.00
26-Apr-17
Renaissance Capital
33.60
6-Mar-17
Sberbank
38.00
15-Mar-17
UBS
29.60
20-Feb-17
VTB Capital
40.00
12-Apr-17
Wood & Company
34.50
20-Feb-17
102
Express
1
Emerging retail banking – how Express works
1,315,489 Express Cards
130 Express Branches
2
for Transport payments
•
•
•
•
•
•
3
Opening accounts and deposits
Issuing loans and credit cards
Credit card and loan repayments
Cash deposit into accounts
Money transfers
Utility and other payments
• Acts as payments card in metro,
buses and mini-buses
10,774 POS Terminals
2,723 Express Pay Terminals
4
at 4,740 Merchants
•
•
•
•
•
•
•
Credit card repayments
Loan repayments
Cash deposit into accounts
Loan activation
Utility and other payments
Mobile top-ups
MetroMoney top-ups
•
•
•
Payments via cards and Express points
P2P transactions between merchant and
supplier
Credit limit with 0% interest rate
103
Express
Capturing emerging mass market customers
25,160
Express Pay terminals
28,822
-3%
25,928
8,608
Express branches
53%
7,363
5,621
No. of transactions ‘000s
5,138
ATMs
35%
4,676
3,806
9,742
POS terminals
131%
6,008
1Q17
1Q16
4,210
1Q15
9,231
Express cards
75%
7,148
5,269
1,719
Internet banking
64%
1,273
1,051
980
Mobile banking
x3
488
324
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
3,236,879
Tellers
4,319,801
-23%
4,210,509
104
Solo
A fundamentally different approach to premium banking
Through the recently launched Solo, we target to attract new clients (currently 21,657) to significantly
increase market share in premium banking from c.13% at the beginning of 2015
SOLO Lounges
New Solo offers:
• Tailor made
banking solutions
• New financial
products such as
bonds
• Concierge-style
environment
• Access to
exclusive products
and events
• Lifestyle
opportunities
3x higher new
clients
attracted per
banker ratio,
compared to
the same
period last
year
105
m2
Unmatched track record
(1/2)
1
Start date:
Project timeline
Completed projects: All projects were completed on budget and on schedule
2
SEP’2010
123 apartments
MAY’2012
525 apartments
3 4
5
DEC’2013
221 apartments
295 apartments
6
SEP’2014
JUL’2014
270 apartments 238 apartments
1,672 apartments completed with 98.1% sales
Project highlights
1
•
•
•
•
•
•
•
•
•
Chubinishvili street
123 apartments
IRR: 47%
Equity multiple: x1.8
Apartments sold: 123/123, 100%
Pre-sales1 was: 91%
Start date: Sep’2010
Completion: Aug’2012
Sales: US$ 9.9mln
Land value unlocked: US$ 0.9mln
•
•
•
•
•
•
•
•
•
Kazbegi Street
295 apartments
IRR: 165%
Equity multiple: x2.3
Apartments sold: 295/295, 100%
Pre-sales: 90%
Start date: Dec’2013
Completion: Feb’2016
Sales: US$ 27.2mln
Land value unlocked: US$ 3.6mln
N
Completed projects
4
Note 1: Pre-sales is defined as sales before project completion
2
•
•
•
•
•
•
•
•
•
5
•
•
•
•
•
•
•
•
•
Tamarashvili street
525 apartments
IRR: 46%
Equity multiple: x2.4
Apartments sold: 523/525, 99.6%
Pre-sales was: 97%
Start date: May’2012
Completion: Jun’2014
Sales: US$ 48.5mln
Land value unlocked: US$ 5.4mln
Tamarashvili Street II
270 apartments
IRR: 71%
Equity multiple: x2.1
Apartments sold: 266/270, 98.5%
Pre-sales: 76%
Start date: Jul’2014
Completion: Jun’2016
Sales: US$ 24.3mln
Land value unlocked: US$ 2.7mln
3
•
•
•
•
•
•
•
•
•
Nutsubidze street
221apartments
IRR: 58%
Equity multiple: x1.5
Apartments sold: 221/221, 100%
Pre-sales: 89%
Start date: Dec’2013
Completion: Sep’2015
Sales: US$ 17.4mln
Land value unlocked: US$ 2.2mln
•
•
•
•
•
•
•
•
•
Moscow avenue
238 apartments
IRR: 31%
Equity multiple: x1.5
Apartments sold: 212/238, 89.1%
Pre-sales: 69%
Start date: Sep’2014
Completion: Jun’2016
Sales: US$ 10.7mln
Land value unlocked: US$ 1.6mln
6
106
m2
Unmatched track record
(2/2)
1
Start date:
Project timeline
Ongoing projects: All projects are within the schedule
2
NOV’2015
819 apartments
4
3
DEC’2015
19 apartments
152 rooms
JUN’2016
302 apartments
OCT’2016
82 apartments
Project highlights
1,222 apartments under construction with 45% pre-sales
1
•
•
•
•
•
•
•
•
•
2
Kartozia Street
819 apartments
IRR: 60%
Equity multiple: x1.7
Pre-sales: 383/819, 47%
Pre-sales: US$ 28.4mln
Start date: Nov’2015
Completion exp.: Oct’2018
Construction progress: 45%
completed
Land value to be unlocked: US$
5.8mln
N
•
•
•
•
•
•
•
•
•
Skyline
19 apartments
IRR: 329%
Equity multiple: x1.1
Pre-sales: 9/19, 47%
Pre-sales: US$ 4.1mln
Start date: Dec’2015
Completion expected: May’2017
Construction progress: 85%
completed
Land value to be unlocked: US$
3.1mln
3
Kazbegi Street II
Residential
• 302 apartments
• IRR: 51%
• Equity multiple: x2.5
• Pre-sales: 127/302, 42%
• Pre-sales: US$ 10.7mln
• Start date: Jun’2016
• Completion expected: Nov’2018
• Construction progress: 18%
completed
• Land value to be unlocked: US$
4.3mln
Ramada Encore (Hotel)
• 152 rooms, 7000 sq.m (gross)
• Start: June-16
• Completion: Nov-17
• Total completion cost: US$
13.2mln
• Profit stabilized year: US$
1.6mln
• ADR (stabilized year): US$
115
4
•
•
•
•
•
•
•
•
•
50 Chavchavadze ave.
82 apartments
IRR: 75%
Equity multiple: x1.6
Pre-sales: 31/82, 38%
Pre-sales: US$ 3.6mln
Start date: Oct’2016
Completion exp.: Oct’2018
Construction progress: 13%
completed
Land value to be unlocked: US$
3.3mln
On-going projects
Note 1: Pre-sales is defined as sales before project completion
107
Notes to key ratios
1 Return on average total assets (ROAA) equals Profit for the period divided by monthly average total assets for the same period;
2 Return on average total equity (ROAE) equals Profit for the period attributable to shareholders of BGEO divided by monthly average equity
attributable to shareholders of BGEO for the same period;
3 Net Interest Margin equals Net Banking Interest Income of the period divided by monthly Average Interest Earning Assets Excluding Cash for the
same period; Interest Earning Assets Excluding Cash comprise: Amounts Due From Credit Institutions, Investment Securities (but excluding
corporate shares) and net Loans To Customers And Finance Lease Receivables;
4 Loan Yield equals Banking Interest Income From Loans To Customers And Finance Lease Receivables divided by monthly Average Gross Loans To
Customers And Finance Lease Receivables;
5 Cost of Funds equals banking interest expense of the period divided by monthly average interest bearing liabilities; interest bearing liabilities include:
amounts due to credit institutions, client deposits and notes and debt securities issued;
6 Operating Leverage equals percentage change in revenue less percentage change in operating expenses;
7 Cost / Income Ratio equals operating expenses divided by revenue;
8 NBG liquidity ratio equals daily average liquid assets (as defined by NBG) during the months divided by daily average liabilities (as defined by NBG)
during the months;
9 Liquid assets include: cash and cash equivalents, amounts due from credit institutions and investment securities;
10 Leverage (Times) equals total liabilities divided by total equity;
11 NPL Coverage Ratio equals allowance for impairment of loans and finance lease receivables divided by NPLs;
12 NPL Coverage Ratio adjusted for discounted value of collateral equals allowance for impairment of loans and finance lease receivables divided by
NPLs (discounted value of collateral is added back to allowance for impairment)
13 Cost of Risk equals impairment charge for loans to customers and finance lease receivables for the period divided by monthly average gross loans
to customers and finance lease receivables over the same period;
14 New NBG (Basel 2/3) Tier I Capital Adequacy ratio equals Tier I Capital divided by total risk weighted assets, both calculated in accordance with the
requirements the National Bank of Georgia instructions;
15 New NBG (Basel 2/3) Total Capital Adequacy ratio equals total capital divided by total risk weighted assets, both calculated in accordance with the
requirements of the National Bank of Georgia instructions;
16 NMF – Not meaningful
17 Constant currency basis – changes assuming constant exchange rate
108
BGEO Group – Company information
Registered Address
84 Brook Street
London W1K 5EH
United Kingdom
www.bgeo.com
Registered under number 7811410 in England and Wales
Incorporation date: 14 October 2011
Stock Listing
London Stock Exchange PLC’s Main Market for listed securities
Ticker: “BGEO.LN”
Contact Information
BGEO Group Investor Relations
Telephone: +44 (0) 20 3178 4052
E-mail: [email protected]
www.bgeo.com
Auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
United Kingdom
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol BS13 8AE
United Kingdom
Please note that Investor Centre is a free, secure online service run by our Registrar, Computershare, giving you convenient access to
information on your shareholdings.
Investor Centre Web Address - www.investorcentre.co.uk
Investor Centre Shareholder Helpline - +44 (0)370 873 5866
Share price information
BGEO Group shareholders can access both the latest and historical prices via our website, www.bgeo.com