Lion Finance Group PLC · LSE:BGEO
Lion Finance — JSC Bank of Georgia — Q2 2011 Earnings Presentation
56 slides from Lion Finance's earnings presentation, August 2011
Slide 1: JSC Bank of Georgia Q2 2011 and 1H results overview
GROWTH AT THE RIGHT PRICE LSE: BGEO / GSE:GEB JSC Bank of Georgia Q2 2011 and 1H results overview August 2011
Slide 2: Introduction to Bank of Georgia
Introduction to Bank of Georgia The leading universal bank in Georgia No.1 by assets (36.1%), (1) gross loans (36.0%), (1) client deposits (34.6%) (1) and equity Investment highlights 36.0%) (1) Undisputed leader of Georgian Leading retail banking, with top brand, best distribution network and broad
Slide 3: JSC Bank of Georgia Q2 2011 and 1H 2011 results overview
JSC Bank of Georgia Q2 2011 and 1H 2011results overview August 2011
Slide 4: Q2 & 1H 2011 P&L results highlights
Q2 & 1H 2011 P&L results highlights Millions unless otherwise noted Q2 2011 Q1 2011 Growth1 Q2 2010 Growth 2 Bank of Georgia (Consolidated, Unaudited IFRS-Based) GEL US$ GEL US$ Q-O-Q GEL US$ Y-O-Y (Unaudited) (Unaudited) (Unaudited) Net Interest Income 60.0 36.0 56.9 33.4 5.4% 51.7 28.0 16.1% Net N
Slide 5: 30 June 2011 Balance Sheet results highlights
30 June 2011 Balance Sheet results highlights Millions, unless otherwise noted Q2 2011 Q1 2011 Q2 2010 Bank of Georgia (Consolidated, unaudited IFRS-Based) GEL US$ GEL US$ GEL US$ (Unaudited) (Unaudited) (Unaudited) Net Loans 2,439.9 1,464.1 2,241.9 1,314.2 1,982.5 1,075.0 Total Assets 4,123.3 2,474
Slide 6: Composition of revenue in Q2 2011 & in 1H 2011
Consolidated Composition of revenue in Q2 2011 & in 1H 2011 Composition of revenue, Q2 2011 Revenue by segments, Q2 2011 Net other non- Other Aldagi BCI interest income 5.6%, 3.8%, 9.7%, GEL5.7 mln GEL3.9 mln GEL 9.9 mln (+46.6% q-o-q) Net foreign Belarus (-18.3% q-o-q) (+8.3% q-o-q) 5.6%, currency
Slide 7: Analysis of revenue
Consolidated Analysis of revenue Revenue growth Net foreign currency related income GEL mln GEL mln 120 16 14.9 101.8 14 13.2 13.4 100 95.0 91.6 91.1 86.1 85.9 86.6 12 81.1 81.7 80.6 79.3 77.4 81.3 10.4 80 75.9 41.8 9.4 9.4 9.6 30.3 27.1 30.2 29.3 35.5 38.1 34.2 10 8.8 8.8 31.3 31.1 30.4 31.3 29.6 8
Slide 8: Composition of recurring operating costs in Q2 2011 & 1H 2011
Consolidated Composition of recurring operating costs in Q2 2011 & 1H 2011 Recurring operating cost structure, Q2 2011 Recurring operating cost structure by segments, Depreciation & amortization Other operating costs 4.5% Q2 2011 13.4%, GEL 2.3 mln GEL 6.6 mln (-12.2% q-o-q) Aldagi BCI Other 11.9% (
Slide 9: Analysis of recurring operating costs
Consolidated Analysis of recurring operating costs Employees Personnel costs GEL mln Q4 2008 2,834 30 28.4 27.5 4,949 27.3 27.4 27.0 25.7 25.9 25.7 2,709 25 23.1 22.0 23.2 22.3 22.5 23.4 Q4 2009 4,781 20 Q2 2010 2,531 5,118 15 Q4 2010 2,620 5,610 10 Q2 2011 2,945 5 5,315 - 1,000 2,000 3,000 4,000 5,
Slide 10: Selected key ratios
Consolidated Selected key ratios Net interest margin Deposit yields 8.5% 8.3% 9.0% 8.1% 8.0% 8.1% 8.0% 7.5% 7.3% 7.5% 7.4% 7.1% 7.3% 7.0% 7.0% 7.0% 6.9% 7.0% 7.0% 6.5% 6.0% 6.0% Q2 2010 Q1 2011 Q2 2011 Q2 2010 Q1 2011 Q2 2011 Deposit Yield, Group Consolidated Net Interest Margin, Group Consolidated
Slide 11: Composition of assets
Consolidated Composition of assets GEL mln 4,500 4,123 2.9% of 4,049 120 total 4,000 156 3.9%of total assets assets 527 12.8% 3,424 4.3% of total assets 674 16.6% of total assets of total 3,500 assets Cash & Equivalents 148 3,124 11.1% of total assets 178 5.7% of total assets 381 3,000 Cash with oth
Slide 12: Gross loan book breakdown
Consolidated Gross loan book breakdown GEL mln 3,000 +17.6% Georgia: RB & WM, CB 2,562 2,542 BNB, 59 Ukraine: BG Bank 2,500 BNB, 77 2,361 Belarus: BNB 2,228 BG Bank, 199 BNB, 84 2,189 2,180 Numbers do not include BNB, 36 BNB, 52 2,039 BNB, 42 CC/Eliminations BG Bank, 194 BG Bank, 192 BNB, 30 1,957 B
Slide 13: Liabilities breakdown
Consolidated Liabilities breakdown GEL mln 4,500 4,123 4,049 18% of total 18% of total liabilities + 4,000 liabilities + equity equity 737.6 751.8 Total equity 3,424 19% of total 3,500 liabilities + equity 7% of total 3,124 6% of total 232.7 305.5 liabilities + liabilities + equity 649.8 equity 3,00
Slide 14: Client deposits breakdown
Consolidated Client deposits breakdown GEL mln 2,200 2,079 CB RB & WM BG Bank BNB 2,005 1,977 BNB , 36 Georgia: RB & WM, CB2,000 BNB , 29 BNB , 37 47% of client Ukraine: BG Bank BG Bank, 197 deposits 1,800 1,638 46% of client Belarus: BNB deposits 1,487 BNB , 18 Numbers do not include 1,600 40% of c
Slide 15: Capital adequacy & wholesale funding
Capital adequacy & wholesale funding August 2011
Slide 16: Capital adequacy
Capital adequacy BIS capital adequacy ratios, BoG consolidated NBG capital adequacy ratios, BoG standalone 40% 36.4% 34.6% 25% 35% 34.3% 35.6% 34.7% 32.7% 31.6% 20.4%19.7% 30% 28.8% 20% 18.3% 18.2% 17.8% 17.7% 25.2%25.0% 27.3% 21.9% 26.6% 27.2% 16.6%16.4% 24.7% 23.5% 15.8% 15.8%15.2% 25% 22.4% 25.8%
Slide 17: International borrowings
International borrowings Selected international loans International borrowings - fixed vs. floating rates, Principle Amount Outstanding as Key Lenders Maturity mil US$ Eurobonds of 30 June 2011 US$ 70.1 million 2012 70.1 30 June 2011 Senior Term Loan from IFC US$ 41.7 million 2013 41.7 Senior Term L
Slide 18: Business overview
Business overview August 2011
Slide 19: Group structure
Group structure Bank of Georgia Group Commercial Banking Securities Insurance JSC “Bank of Georgia” BG Aldagi BNB Capital BCI Corporate Wealth Retail Banking Banking Management Ukraine Georgia Georgia Belarus Belarus Israel UK Georgia August 2011 Page 19
Slide 20: BoG standalone results overview
BoG standalone results overview August 2011
Slide 21: BoG standalone performance
Standalone BoG standalone performance Revenue performance Recurring operating cost structure, Q2 2011 GEL mln 100 Other operating expenses, 2.6% 90 86.4 Depreciation & GEL 1.0 mln 79.9 78.2 amortization, (-11.2% q-o-q) 80 74.7 71.4 69.6 15.4% 70 66.6 71.1 66.6 69.1 25.3 23.0 28.5 GEL 5.7 mln 62.3 61
Slide 22: Composition of assets
Standalone Composition of assets GEL mln 4,500 3,935 4,013 2% of total 98 assets 4,000 136 3% of total assets Cash & Equivalents 503 13% of total 3,333 3% of total assets 668 assets 3,500 17% of total assets 3,033 115 Cash with other 4% of total assets 12% of total assets 127 399 3,000 Banks 314 10%
Slide 23: Loan book composition
Standalone Loan book composition GEL mln RB & WM loan book breakdown, Q2 2011 2,562.0 2,500 SME, 4% Mortgage RB Micro loans, loans, 32% 20% 2,000 1,100.2 Credit cards and overdrafts, 11% 1,500 Consumer and WM 25.5 other, 33% CB loan book breakdown, Q2 2011 1,000 Other, 15% Pharmaceuticals Trade, 21%
Slide 24: Analysis of the loan book
Standalone Analysis of the loan book Loans by currency, 30 June 2011 Loan concentration 100% 25% 21.8% 90% 19.5% 80% 20% 70% 56.0% 72.1% 15.0% 60% 84.6% 15% 12.6% 50% 40% 10% 30% 20% 44.0% 5% 27.9% 10% 15.4% 0% 0% RB & WM CB Total Q2 2010 Q2 2011 GEL Foreign Currency Top 10 Borrowers Top 20 Borrower
Slide 25: Provisioning
Standalone Provisioning NPLs include 90 NPLs & write-offs, 30 June 2011 NPL coverage ratio days overdue 5% loans, including 600% 554.4% principal amount 0.8% and interest 4% 500% payments 400% 524.0% 3% 0.2% 300% 208.4% 2% 3.9% 149.8% 200% 138.3% 169.1% 124.1% 113.5% 3.0% 116.1% 118.8% 106.6% 146.1%
Slide 26: Provisioning cont'd – BoG standalone
Standalone Provisioning cont’d – BoG standalone Loan loss reserve NPLs 7.4% GEL mln 160 8% 160 7.5% 7.4% 7.5% 8% 6.9% 7.0% 6.5% 6.8% 6.7% 6.9% 140 6.4% 136.8 7% 6.5% 118.7 129.2 140 7% 120 115.9 6% 5.5% 111.3 120 5.2% 5.1% 6% 5.0% 4.9% 61.0 54.4 62.4 4.7% 100 93.0 69.8 59.4 96.54.7% 87.6 99.1 5% 100
Slide 27: BoG standalone liabilities
Standalone BoG standalone liabilities GEL mln Leverage ratio, BoG standalone 4,500 5 4.3 4.2 4 3.6 4,012.7 3.3 3.2 4,000 3.1 3.1 3.1 3.2 2.9 3.0 143.1 2.8 2.8 2.8 4% of Total Liabilities + equity 3 Deposits And Loans From Banks 3,500 2 1 Client Deposits 52% of Total Liabilities + equity 3,000 2,070.
Slide 28: Analysis of deposits
Standalone Analysis of deposits Client deposit breakdown, 30 June 2011 Client deposits by currency, 30 June 2011 Individual 100% current 90% accounts, Corporate Corporate 80% 9.0% time & current 70% 61.8% demand 43.7% accounts, 60% 75.4% 96.8% deposits, 33.8% 19.2% 50% 40% Individual time & 30% 56.3
Slide 29: Deposit yields
Standalone Deposit yields 9% 8.5% 8.1% 8% 8.3% 7.5% 7.4% 7.5% 7.7% 6.9% 7.1% 6.7% 7% 7.6% 7.3% 7.2% 6.5% 6.2% 5.9% 6.6% 6.6% 6% 6.1% 4.9% 5% 5.3% 4% 3% 2% 1% 0% Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 CB Deposit Yields, BoG Standalone RB Deposit Yields, BoG Standalone Blended Deposit
Slide 30: Risk management
Standalone Risk management Liquidity risk management, 30 June 2011 Currency risk management, 31 March 2011 GEL mln 18% 2,000 16.0% 1,588.6 16% 1,500 14% 13.0% 1,166.5 1,000 942.1 742.4 12% 735.7 328.7 373.3 10% 500 381.6 336.6 306.0 25.0 - 8% 7.4% 0 6.2% 5.8% 6.0% 167.7 131.0 156.0 5.2% 6% -500 (623
Slide 31: Corporate banking
Standalone Corporate banking Integrated client Overview Corporate loan portfolio, 30 June 2011 coverage in the No.1 corporate bank in Georgia following key Circa 40% market share based on customer deposits(1) sectors Other, 15% Circa 36% market share based on corporate loans(2) Construction & Integr
Slide 32: Retail Banking – No. 1 retail bank in Georgia
Standalone Retail Banking – No. 1 retail bank in Georgia Retail loans originated RB loan portfolio, 30 June 2011 GEL mln SME, 4% 400 335.0 350 317.6 Mortgage Micro loans, loans, 31% 300 266.9 21% 250 226.0 211.3 186.9 196.4 200 Credit cards 140.2 150 128.2 and 97.5 104.9 overdrafts, 100 74.9 68.8 55
Slide 33: Retail loan book analysis
Standalone Retail loan book analysis Mortgage loans (RB & WM) Consumer loans (RB & WM) GEL mln GEL mln 450 -10% 300 +31% 400 406.1 -2% 244.9 365.0 357.6 250 +38% 350 +142% 300 200 186.6 168.0 250 150 135.5 200 +6% 150 100 -40% +57% 65.3 69.3 100 46.7 50 50 28.2 44.4 - - Volume of Mortgage Volume of
Slide 34: Deposit analysis
Standalone Deposit analysis Volume of deposits outstanding (RB & WM) Volume of deposits outstanding (CB) GEL mln GEL mln 1200 1200 1000 1000 193.8 205.1 227.6 800 800 145.7 192.0 152.5 113.2 600 696.4 666.5 600 188.7 145.6 135.6 104.6 726.8 588.0 279.0 119.3 139.4 185.8 153.6 71.7 457.7 502.6 199.5
Slide 35: Card processing
Standalone Card processing Client banks Cars transaction authorizations by Georgian Card mln 12 10.3 • 56% ownership of 10 9.0 9.3 Georgian Card 8.7 8.5 8.6 8.4 7.7 7.8 8.0 8.0 8 7.2 7.2 7.4 6.6 6 5.0 4.2 4 2.9 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07 07 07 07 08 08 08 08 09 09 0
Slide 36: Analysis of mortgage portfolio
Standalone Analysis of mortgage portfolio Number of mortgage loans issued & outstanding, Volume of mortgage loans outstanding, (RB & WM) 10,000 (RB &WM) 8,415 8,642 8,570 GEL mln 450 9,000 8,127 8,240 8,330 8,277 415.0 7,967 8,057 8,0278,032 389.3 386.5 385.1 406.1 391.7 8,000 7,476 400 373.7 372.2
Slide 37: Wealth Management (WM) performance review
Standalone Wealth Management (WM) performance review WM clients and client assets WM deposits GEL mln 450 1,600 1,382 1,387 1,341 1,358 1,364 400 1,272 1,400 Current 1,444 350 1,384 1,429 1,454 1,331 324.1 326.0 1,200 Accounts & 298.6 1,253 Demand 300 235.7 247.2 1,184 1,000 Deposits, 250 205.6 16.0
Slide 38: Belarusky Narodny Bank (BNB), Belarus
Belarusky Narodny Bank (BNB), Belarus August 2011
Slide 39: BNB performance
BNB BNB performance Revenue growth GEL mln Costs GEL mln 7 16.6% 18% 8 14.9% 5.7 16% 6 14.1% 7 10.9% 12.2% 14% 5 15.1% 4.2 12% 6 12.7% 3.8 2.4 4 10.8% 10.9% 3.6 11.5% 10% 5 3.4 2.9 3.0 10.1% 1.5 3 1.4 1.5 8% 4 2.4 2.1 2.2 0.6 0.6 1.9 6% 2 1.7 3 0.7 0.6 3.3 4% 0.8 2.3 2.3 2.4 2.7 1 0.8 2.2 2 0.2 1.4
Slide 40: BNB loan portfolio as at 30 June 2011
BNB BNB loan portfolio as at 30 June 2011 Loan portfolio breakdown Loan loss reserve RB, 0.11 RB, 13% CB, 1.94 CB, 87% Gross loans: GEL 59.3 mln Loan loss reserve: GEL 2.0 mln RB loan portfolio breakdown CB loan portfolio breakdown Mortgage Card loans, 0.2% overdrafts, Other, 10% 0.7% Trade, 46% Ind
Slide 41: BNB client deposits as at 30 June 2011
BNB BNB client deposits as at 30 June 2011 Client deposits breakdown GEL '000 40,000 35,000 Current Time Accounts Deposits Outstanding , 30,000 Outstanding , 46.3% 52.7% Demand Deposits 25,000 Outstanding , 27,299 1.0% 20,000 15,000 10,000 5,000 9,035 0 CB Deposits Outstanding Jan-00 RB Deposits Out
Slide 42: Insurance
L3ors5hO133CMbL 8563N BANK OF GEORGIA Insurance August 2011
Slide 43: Aldagi BCI
Aldagi BCI Aldagi BCI Gross premiums written/Net premiums earned Revenue GEL 000s GEL mln 20,500 18,734 7.0 17,790 6.3 6.1 16,777 5.8 17,500 6.0 5.4 4.9 4.8 4.9 14,500 12,523 12,700 12,583 5.0 4.6 4.0 11,500 4.0 3.4 8,500 3.0 5,500 2.0 2,500 1.0 (500) - Q2 2010 Q1 2011 Q2 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 44: BG Capital
L3ors5hO133CMbL 8563N BANK OF GEORGIA BG Capital August 2011
Slide 45: BG Capital
BG Capital BG Capital Revenue Net income/(loss) GEL mln GEL mln 4 2 2.9 0.8 3 1 0.2 2 1.6 0 0.9 1.1 1.1 0.9 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 (1) 0 (1.1) (2) (1.6) (1.7) (1.6) (1) (1.0) (0.5) (0.6) (0.7) (2.0) (1.9) (2.0) (0.7)
Slide 46: Contact
Contact Irakli Gilauri Chief Executive Officer +995 32 444 109 igilauri@bog.ge Giorgi Chiladze Deputy CEO, Finance +995 32 444 249 gchiladze@bog.ge Macca Ekizashvili Head of Investor Relations Head of Representative Office, London 84 Brook St, London, W1K 5EH +44 203 178 4052 ir@bog.ge August 2011 P
Slide 47: Appendices
L3ors5hO133CMbL 8563N BANK OF GEORGIA Appendices August 2011
Slide 48: Bank of Georgia shareholder structure & management
Bank of Georgia shareholder structure & management August 2011
Slide 49: Ownership structure
Ownership structure 31-Dec-11 Number % Ownership structure, 31 December 2010 GDR Holders* 27,627,777 88.1% Broadly owned by Local Shares Management Local Shares Local Shares Held by Institutional Shareholders 1,670,990 5.3% Held by & Held by over 100 Employees** Domestic and Management & Employees**
Slide 50: Analyst coverage
Analyst coverage Analyst Email Mikhail Shlemov mikhail.shlemov@vtbcapital.com Analyst Email David Nangle Dnangle@rencap.com Analyst Email Andrzej Nowaczek andrzej.nowaczek@uk.ing.com Analyst Email Thomas Stögner thomas.stoegner@macquarie.com Analyst Email Renat Syzdykov res@visocap.com August 2011 P
Slide 51: Georgian banking sector – key trends 2008- Q2 2011
Georgian banking sector – key trends 2008- Q2 2011 August 2011
Slide 52: Peer group's market share in total assets
Peer group’s market share in total assets YE 2008 YE 2009 YE 2010 Jun-11 40% 36.2% 36.1% 35% 33.0% 32.9% 30% 25% 23.6% 23.8% 24.0% 22.0% 23.2% 22.9% 20.8% 21.3% 20% 15% 10% 9.6% 8.2% 9.8% 7.7% 7.3% 7.3% 8.6% 5.8% 4.8%4.6% 5% 3.3% 3.2% 0% BoG TBC ProCredit Bank Bank Republic VTB Other Banks Note: all
Slide 53: Peer group's market share in gross loans
Peer group’s market share in gross loans 40% YE 2008 YE 2009 YE 2010 Jun-11 35.9% 36.0% 35% 32.9% 30% 31.8% 25.1% 25% 23.7% 21.6%23.8% 20.6% 20.7% 20% 18.6% 20.3% 15% 10.2% 10.1% 10% 8.7% 9.4% 10.1% 8.3% 6.8%6.4% 6.0% 5.6% 5% 3.7%3.4% 0% BoG TBC ProCredit Bank Republic VTB Other Banks Note: all data
Slide 54: Peer group's market share in deposits
Peer group’s market share in deposits 40% YE 2008 YE 2009 YE 2010 Jun-11 34.6% 35% 32.6% 30% 28.8% 27.4% 27.6% 25.3% 25% 24.1% 23.8% 23.1% 22.5% 24.1% 20.6% 20% 15% 10.8% 10% 9.1% 8.9% 8.1% 8.1% 8.3% 7.8% 6.5% 6.5% 5.5% 5% 3.0% 3.1% 0% BoG TBC ProCredit Bank Republic VTB Other Banks Note: all data b
Slide 55: Georgian banking sector – key trends 2008/2010
Georgian banking sector – key trends 2008/2010 Market Share Market Share Market Share Growth (YE 2009) (YE 2010) June 2011 As % of 2009 2010 June 2011 Top 5 Bank of Top 5 Bank of Top 5 Bank of GEL mln YE 2009 YE 2010 June 2011 GDP* Y-O-Y Y-O-Y YTD Banks Georgia Banks Georgia Banks Georgia Total Asse
Slide 56: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements This presentation contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial p