Bank of Georgia : 4Q23 and FY23 Results Call Presentation

RESULTS CALL PRESENTATION

4Q23 & FY23 Performance

15 March 2024 www.bankofgeorgiagroup.com

Disclaimer - forward looking statements

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 Bank of Georgia 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: macro risk, including domestic instability; geopolitical risk; credit risk; liquidity and funding risk; capital risk; market risk; regulatory and legal risk; conduct risk; financial crime risk; information security and data protection risks; operational risk; human capital risk; model risk; strategic risk; reputational risk; climate-related risk; and other key factors that could adversely affect our business and financial performance, as indicated elsewhere in this document and in past and future filings and reports of the Group, including the 'Principal risks and uncertainties' included in Bank of Georgia Group PLC's Annual Report and Accounts 2022 and in the 2Q23 & 1H23 Results Report. No part of this document constitutes, or shall be taken to constitute, an invitation or inducement to invest in Bank of Georgia Group PLC or any other entity within the Group, and must not be relied upon in any way in connection with any investment decision. Bank of Georgia Group PLC and other entities within the Group undertake 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 document should be construed as a profit forecast.

2

The Group delivered a strong performance in 4Q23 and FY23

Highlights of the quarter

			December 2023
Profit	ROE	C/I
GEL 329m	26.7%	34.3%
up 0.8% y-o-y
Highlights of the year		NPS	MAU
	59	1.4m
			up 21.0% y-o-y
Profit	ROE	C/I
GEL 1,375m	29.9%	29.8%
up 21.4% y-o-y

Due to the settlement of a legacy claim, the fair value revaluation of the receivable resulted in a one-off other income of GEL 1.5 million posted in 4Q23 and one-off other income of GEL 22.6 for FY23. Net other income has been adjusted for these
one-offs. Due to the settlement of the same legacy claim, 4Q22 and FY22 net other income was adjusted for a one-off GEL 391.1 million. 4Q22 and FY22 income tax expense was also adjusted for a one-off GEL 79.3 income tax expense due to an
amendment to the corporate taxation model in Georgia. As a result, profit, ROAA and ROAE were adjusted for both one-off other income and one-off income tax expense where applicable and Cost:income ratios were adjusted for one-off other
income where applicable.	3

Contents

MACROECONOMIC HIGHLIGHTS

GROUP OVERVIEW AND STRATEGY 4Q23 AND FY23 RESULTS

4

Robust economic growth persisted in 2023 as slowing external demand was substituted by stronger domestic spending

Real GDP y-o-y growth

2011-2022	2021	2022	2023	2024F	2025F
average
5.2%	10.6%	11.0%	7.5%	6.0%	5.5%

18.0%

14.6%	11.6%
		11.0%
	10.5%
	9.7%	9.3%
10.6%							8.3%
		7.3% 7.5%	7.7%
	8.8%				6.2%
	8.3%	8.4%			5.8%
	7.2%
			7.0%				5.9%
			5.8%		5.5%	5.1%
	2.6%
Jan-22Feb-22Mar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Jan-23Feb-23Mar-23	Apr-23May-23	Jun-23Jul-23Aug-23Sep-23Oct-23Nov-23Dec-23

Key growth drivers in 2023:

• Robust domestic demand driven by strong investment and consumption spending
• Increased activity in the trade, IT, construction, transport, and education sectors
• Solid inflows from tourism and exports:
• • Tourism revenues up by 17.3% y-o-y
  • Export of goods increased by 9.1% y-o-y

Growth outlook for 2024:

• Real GDP growth is expected at 6.0% in 2024 driven by strong consumption and investment expenditure along with resilient external demand
• Sustained geopolitical instability in the region and tight global financial conditions pose downside risks to the outlook
• Increased fiscal space and replenished international reserves cushion the economy from possible shocks down the road

Source: Geostat, Galt & Taggart
Note: In February 2024, Geostat revised the historical series of GDP in line with the recommendations	5
from international organisations such as the IMF and Eurostat.

Solid external sector inflows in 2023 despite recent slowdown from the previous year's high base

Export of goods

		Export of goods, US$ bn		% change y-o-y
2.0												50%
1.6							1.50			1.55	1.49	40%
1.2												30%
0.8												20%
0.4												10%
0.0												0%
-0.4											-0.3%	-10%
1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23

Remittances
		Remittances inflow, US$ bn		% change y-o-y
1.8												150%
1.4												125%
												100%
1.0												75%
0.6												50%
0.2							1.56			0.87	0.88	25%
								0%
-0.2											-43.3%-25%
-0.6												-50%
1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23

Import of goods

		Import of goods, US$ bn		% change y-o-y
5.0										4.11		50%
4.0							3.98			3.88	40%
3.0												30%
2.0												20%
1.0												10%
0.0												0%
-1.0											-2.7%	-10%
1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23

Tourism inflows

Tourism revenues, US$ bn

Tourism revenues, % of 2019 level

2.0	Overnight trips, % of 2019 level					127%	150%
1.6											93.0%	120%
1.2												90%
0.8												60%
0.4												30%
0.0							1.00			1.45	0.87	0%
1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23	6

Source: Geostat, NBG

Steady improvements in the inflation outlook enabling the central bank to continue cutting interest rate

Inflation and monetary policy rate

16%			Monetary policy rate			Annual CPI inflation			Inflation target	16%
14%			Annual		5-year		Jan-24		Feb-24							14%
			average
															
12%		Headline CPI		6.8%			0.0%		0.3%							12%
			Core CPI		4.7%			1.2%		2.4%
10%																	10%	
8%																	8%
																8.25%
6%																	6%
4%																	4%	
2%																	2%
0%																	0%
-2%	Jul-14		Mar-15Jul-15Nov-15Mar-16	Jul-16	Nov-16Mar-17Jul-17	Nov-17		Jul-18Nov-18Mar-19	Jul-19					Nov-21Mar-22Jul-22Nov-22			-2%
Mar-14	Nov-14	Mar-18	Nov-19Mar-20Jul-20	Nov-20	Mar-21	Jul-21	Mar-23Jul-23	Nov-23	Mar-24

Inflation is expected to remain low amid decreasing domestic price pressures and falling import prices

The National Bank of Georgia cut the policy rate by 0.75 percentage points on 13 March 2024, thereby reducing the refinancing rate to 8.25%

Additional interest rate cuts are expected in 2024 amid improved inflation outlook

Source: Geostat, NBG

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GEL supported by sustained FX inflows

Currency movements vs. US$, 12/31/2022 - 2/29/2024

4.8% 2.4% 1.6% 1.5%

-0.2%-2.4%-3.5%-11.2%-23.6%-29.7%-66.7%

GBP

KZT

GEL

EUR

AZN

AMD

UAH

UZS

RUB

BYN

TRY

GEL real effective exchange rate

140			140
130	REER (Jan 2014 = 100)	REER 3-year moving average	130
120			120
110			110
100			100
90			90
80	Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24	80

• Despite some interim volatility, GEL remained broadly unchanged against USD in 2023, after a 12.5% appreciation in 2022
• In the medium term, GEL is expected to remain stable backed by resilient external inflows and a positive growth outlook
• Previous real appreciation versus trading partners started to reverse due to lower inflation in Georgia

Source: NBG	8
Note: +/- means appreciation/depreciation of the corresponding currencies.

Adequately high international reserves cushion the economy against external shocks

Gross reserves increased by US$102 m in 2023, while net reserved were up US$ 623 m

Gross international reserves, USD bn

Net international reserves, USD bn

3 months of goods and services imports*

In 4Q23, the NBG discontinued hard currency purchases as FX inflows slowed

Central bank's interventions, net purchase in US$ m

Net FX	2020	2021	2022	2023
purchases by				598

2.5

3.3

3.0

2.8

	5.0	5.1	5.3
4.9	5.0

4.3

3.9

3.5

2.7 2.9 2.8

2.4 2.2

NBG, US$ m

-916

-355

565

1,279

																			461
		243															232	301	332
		0	90	40	0 0	50	63	85	135	30							58
-40-27	-60-45	-60									-73	-20	100 121	-93	-94	-4	-26		111

1.6	1.5	1.6	1.7	1.8	1.6	1.7

2015 2016 2017 2018 2019 2020 2021 2022 1Q23 2Q23 3Q23 4Q23

Source: NBG, BOG

*Gross reserves are considered adequate when their amount exceeds the 3-month import bill.

-160	-140	- -	265	-164	-
			-
				-430
1Q15 2Q15 3Q15 4Q15	1Q16 2Q16 3Q16 4Q16	1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20	3Q20	4Q20 1Q21	2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23

Source: NBG	9

Healthy banking sector, with dollarisation down to historically low levels

Bank loan book growth vs. nominal GDP growth

Loan and deposit dollarisation

Non-performing bank loans to total gross loans in selected countries, Sep-2023

Nominal GDP growth, y-o-y Bank credit growth, y-o-y

Bank loan dollarisation Bank deposit dollarisation

Lithuania

Estonia

Czech Rep.

0.5%

1.0%

1.2%

	Bank credit growth in constant currency terms, y-o-y	75%
45%																				70%
40%																				65%
35%
30%																				60%
25%																				55%
20%																			17.6%	50%																		50.7%
15%																			17.1%
10%																			7.5%	45%																		45.2%
5%
																			40%
0%
-5%																				35%
-10%													4Q20		4Q21		4Q22	2Q23	4Q23	30%
2Q14	4Q14	2Q15	4Q15	2Q16	4Q16	2Q17	4Q17	2Q18	4Q18	2Q19	4Q19	2Q20	2Q21	2Q22		1Q14	3Q14	1Q15	3Q15	1Q16	3Q16	1Q17	3Q17 1Q18	3Q18	1Q19	3Q19	1Q20	3Q20	1Q21	3Q21 1Q22	3Q22	1Q23	3Q23

Türkiye

Slovenia

Latvia

Georgia

Slovakia

Poland

Azerbaijan

Armenia

Romania

North Macedonia

Hungary

Uzbekistan

Bulgaria

Bosnia & Herz.

Croatia

Belarus

Russia

Montenegro

Cyprus

Moldova

Greece

1.4%

1.5%

1.5% 1.6%

2.0%

2.4%

2.5%

2.5%

2.6% 2.7%

3.4%

3.7%

3.8%

4.1%

4.1%

5.3%

5.3%

5.9%

6.6%

6.7%

7.5%

Source: NBG, Geostat, BOG	Source: NBG	Source: IMF
Note: In February 2024, Geostat revised the historical series of GDP
in line with the recommendations from international organisations		10
such as the IMF and Eurostat.