BANKING BUSINESS CREDIT RISK OVERVIEW BGEO Investor Day 9 November 2017 Tbilisi, Georgia Speaker: Giorgi Chiladze, CRO, JSC Bank of Georgia

CONTENT

Cost of risk

Q&A

IFRS9 impact estimation

Banking Business loan portfolio overview

2

LOAN PORTFOLIO DYNAMICS

NET BANKING BUSINESS LOAN PORTFOLIO

* Other mainly includes BNB, GLC and Banking Business eliminations ** Growth drivers in RB – Sep 16 to Sep 17:

• Mortgages- 43% • MSME – 42% • Consumer loans and credit card balances – 30%

1,348 1,613 2,067 2,796

3,902 4,541** 1,735

1,833 2,179

2,211

2,395 1,994

44 121

195

360

384 417

3,127 3,567

4,441

5,367

6,682 6,951 19%

14%

24%

21%

25%

22%

0%

5%

10%

15%

20%

25%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2012 2013 2014 2015 2016 Sep 2017

GE

L M

illio

ns

RB CIB Other* Y-o-Y Growth Rate

3

0%

20%

40%

60%

80%

100%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Bank loans to GDP, %

LOANS TO GDP TREND

BANKING SECTOR CREDIT TO GDP*, %

* Based on NBG data

4

Banking Penetration (Sector Loans to GDP)

Source: Central Banks, IMF, as of 31 Dec 2016

84.9%

74.7%

64.6%

62.1%

57.9%

56.9%

55.7%

53.2%

48.1%

41.4%

Estonia

Serbia

Russia

Lithuania

Latvia

Turkey

Georgia

Bulgaria

Armenia

Ukraine

1.3%

0.9% 1.0%

0.9% 0.7% 0.8%

1.1%

0.9% 1.0%

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

0.5%

0.7%

1.3%

0.6% 0.6%

1.3%

0.9%

0.5%

0.7%

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

1.0%

0.6%

0.9% 0.7%

0.5%

0.7% 0.9%

0.4% 0.5%

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

STABLE LENDING ENVIRONMENT

MORTGAGES* – GEL 1,466 MILLION MSME – GEL 1,501 MILLION

* Includes RB and WM gross loans

30-90 DPD Portfolio

CONSUMER LOANS & CREDIT CARDS*– GEL 1,332 MILLION

EXPRESS & OTHER RETAIL*– GEL 353 MILLION

30-90 DPD Portfolio

30-90 DPD Portfolio 30-90 DPD Portfolio

1.5%

1.2%

1.6%

1.3% 1.1% 1.1%

1.4%

1.1% 1.1%

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

5

16.8% 16.6%

15.7%

12.7%

11.8%

10.4%

10%

15%

20%

2012 2013 2014 2015 2016 Sep 2017

Top 10 Concentration

DIVERSIFIED EXPOSURE

CONCENCTRATION OF TOP 10 BORROWERS

EXPOSURE BY SECTOR AS OF SEP 2017*

* Sector breakdown based on gross Banking Business portfolio

Manufacturing,

8.6%

Real estate, 5.1%

Construction,

4.0%

Trade, 3.7%

Hospitality, 2.6%

Other Sectors,

10.8%

Consumer loans,

22.3%

Residential

mortgage loans,

20.2%

Micro loans,

13.4%

SME loans,

9.3%

6

GEL and

other

currency

loans

26%**

USD loans

with USD

income

47%

USD loans

with non-

USD income

27%

DE-DOLLARISATION

BANKING BUSINESS* CIB CURRENCY BREAKDOWN

* Currency Breakdown based on gross loan portfolio ** Includes credit cards

73% 67% 72% 71% 71% 61%

27% 33% 28% 29% 29% 39%

2012 2013 2014 2015 2016 Sep 2017

Foreign Currency National Currency

RETAIL BANKING* RETAIL BANKING CURRENCY BREAKDOWN

50% 41% 50% 54% 60% 49%

50% 59% 50% 46% 40% 51%

2012 2013 2014 2015 2016 Sep 2017

Foreign Currency National Currency

GEL and

other

currency

loans

54%** USD loans

with USD

income

10%

USD loans

with non-

USD income

36%

7

47%

23% 29%

43%

23% 34%

0-3 Years 3-5 Years 5-10 Years >10 Years

Sep 2016 Sep 2017

97%

3%

93%

7%

0-3 Years 3-5 Years 5-10 Years >10 Years

Sep 2016 Sep 2017

35%

21%

35%

9%

34%

20%

34%

12%

0-3 Years 3-5 Years 5-10 Years >10 Years

Sep 2016 Sep 2017

PORTFOLIO AMORTISATION

MORTGAGES*– GEL 1,466 MILLION MSME – GEL 1,501 MILLION

* Based on RB and WM gross loan portfolio

GENERAL CONSUMER LOANS* – GEL 632 MILLION HOME EQUITY CONSUMER LOANS* – GEL 410 MILLION

77%

16% 7%

76%

17% 8%

0-3 Years 3-5 Years 5-10 Years >10 Years

Sep 2016 Sep 2017

Average duration 3.8 years

Average duration 1.2 years Average duration 2.6 years

Average duration 1.6 years

8

HIGH LEVEL OF COLLATERALISATION

TOTAL LOAN BOOK BY COLLATERAL TYPES

SEP 2016 VS SEP 2017

65% 12%

4%

19%

69%

10%

3%

18%

Real Estate and Cash

Sureties

Movable Assets

Unsecured

• Inside end – Sep 2016 • Outside end – Sep 2017 • Based on standalone BOG data

9

0%

2%

4%

6%

8%

10%

12%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Capitalization

Average

STABLE REAL ESTATE ENVIRONMENT

* Based on NBG Data

REAL ESTATE INDICES*

(Average taken over 3Q07 and 3Q17)

CAPITALISATION (RENT TO PRICE) RATIO*

10

50

100

150

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Inflation adjusted Real estate price index (3Q17=100, GEL)

IMPROVING LOAN PORTFOLIO QUALITY

* Only real estate assets are used for coverage adjustment

BANKING BUSINESS NPL COMPOSITION BANKING BUSINESS NPL COVERAGE

100.0 120.9 122.8 161.4

202.0 179.6

21.8 16.1 18.8

45.0

54.6 69.2

4.5 7.9 12.0

34.7

38.2 48.3

126.3 144.9 153.6

241.1

294.8 297.1

3.9% 3.9% 3.4%

4.3% 4.2% 4.1%

0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016 Sep 2017

GE

L m

illio

ns

CIB RB Other NPL/Gross Loan portfolio

86.3% 82.8%

67.5%

83.4% 86.7% 93.6%

111.5% 109.6% 110.6% 120.6%

132.1% 132.8%

2012 2013 2014 2015 2016 Sep 2017

NPL Coverage

NPL Coverage adjusted by collateral value*

11

CONTENTS

Cost of risk

Q&A

IFRS9 impact estimation

Banking Business loan portfolio overview

12

COST OF RISK BANKING BUSINESS

RETAIL BANKING

1.3% 1.3% 1.2%

2.7% 2.7%

2.2%

2012 2013 2014 2015 2016 9M17

0.9%

1.8%

0.4%

2.6% 2.3%

2.8%

2012 2013 2014 2015 2016 9M17

1.6%

0.8%

1.7%

2.2%

3.1%

1.0%

2012 2013 2014 2015 2016 9M17

CORPORATE & INVESTMENT BANKING

13

COST OF RISK - RETAIL BANKING

COST OF RISK

3.2%

2.1%

2.5% 2.3%

2.4%

2.0%

3.4%

3.1%

2.0%

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

NET CHARGE-OFF RATE

1.0%

0.5% 0.6% 0.5% 0.5% 0.4% 0.5% 0.5% 0.5%

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

14

COST OF RISK COMPOSITION

RB & WM GROSS LOAN BOOK FOR SEP 2017 GEL 4,651.1 MILLION

Low High

15.8%

3.1%

1.7%

0.4%

Dollarisation level

Express & Other Retail Loans

Consumer Loans & Credit Cards

Mortgages

MSME

Mortgages (8.1%)

MSME (12.4%)

Consumer Loans & Credit Cards (20.7%)

Express & Other Retail Loans (47.7%)

1,466

1,501

1,332

353

Gross Loan Book

0.13%

0.58%

0.88%

1.19%

Cost of Risk Decomposition

RB &WM 9M17

LOAN YIELD

RB &WM 9M17 COST OF RISK DECOMPOSITION

RB &WM 9M17

COST OF RISK – 2.8%

15

CONTENTS

Cost of risk

Q&A

IFRS9 impact estimation

Banking Business loan portfolio overview

16

17

IFRS 9 impact estimation

Estimated impact on Banking Business Shareholder Equity Key changes in impairment model

Staging IFRS 9 introduces new 3-stage expected loss model compared to 2-stage incurred loss model in IAS 39 Calculation of impairment Stage 1: 12 months expected credit losses Stage 2 and 3: lifetime expected credit

losses Macroeconomic parameters - Impairment under IFRS 9 is calculated based on forecasted macroeconomic parameters

No impact on Regulatory Capital

Reduction by GEL 44 million to GEL 58 million

Or by 2.7% to 3.6%

No change to Cost of Risk through the cycle

QUESTIONS? BGEO Investor Day 9 November 2017 Tbilisi, Georgia

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 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 and in its Half Year 2017 Results announcement. 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, including any future entity such as BGEO Investments PLC or Bank of Georgia PLC, 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.

19