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TBC Bank 2011 Q2

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TBC Bank Presentation

TBC Bank Presentation

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  • 1. TBC BankRecent Financial performanceH1 2011
  • 2. Contents • Georgian Banking Sector • TBC Bank at a Glance • Business lines • Strategy and Forecast • Financials • Capital 2
  • 3. Georgia At A Glance  General Components of Nominal GDP* (2010 Prel) — Population: 4.4 million — Currency: Georgian Lari (GEL) Industry 16.9%  Economy — GDP: USD 14.1 bln; GDP per Capita: USD 3,131 (Projected 2011) Trade 16.6% — Total Government Debt (in % of GDP): 36.8% (Projected 2011) — Average yearly Inflation June 2011: 11.3%; non-food inflation 2010 : 2.3%* Public Administration 13.0%  Currency Transport & Communication 11.6% — 1 USD = GEL 1.6665, 1 EUR = GEL 2.4054** — USD/GEL during last five years: Max 1.89, Min 1.40 Agriculture 8.4%  Ratings Healthcare & Social Assistance 6.6% — Fitch Rating B+ — Standard & Poors: B+/Stable Construction 6.3% — Moodys rating: Ba3/Stable Education 4.8%  Recent Achievements — No 1 “reformer” named by IFC/World Bank (Doing Business Report 2011) Other 15.7% — No 4 in TI 2010 Global Corruption Barometer together with Iceland and Portugal * Calculated using nominal GDP (preliminary) at basic prices Source: Geostat (TI 2010 Global Corruption Barometer) — No 12 globally in Ease of Doing Business in 2010 (Doing Business Report 2011) Source: IMF GDP Nominal GDP (GEL $bln) Real GDP growth, y-o-y (%) 30.0 13% 25.0 9.4% 10%Gel Bln 6.4% 12.3% 5.3% 20.0 7% 2.4% 4% 15.0 18.0 5.5% 1% 10.0 17.0 -3.8% 26.4 20.8 -2% 13.8 19.1 23.6 5.0 -5% 0.0 -8% 2006 2007 2008 2009 2010 Prel 2011 F 2012 F *Geostat Figure **As of June 30 Source: IMF 3
  • 4. Attractive Macroeconomic and Banking Sector Fundamentals Real GDP growth 2010 and Loan Book Growth 2010 Loan to GDP and Deposits to GDP 15% 200% 5% 2% 5% 10% 13% 3% 20% -6% 26% 108% 131% 93% 153% 104% 83% 188% 78% 114% 13% 11% 150% 9% 67% 7% 100% 76% 37% 8.2% 52% 58% 5% 35% 7.0% 33% 43% 6.4% 50% 3% 26% 76% 3.8% 3.9% 4.3% 70% 53% 54% 48% 59% 1% -1.3% 0.2% 43% 43% 2.3% 30% 0% -1% ROM BUL CZE POL RUS UKR GEO KAZ TUR GEO KAZ RUS ROM POL TUR UKR CZE BUL -3% Real GDP growth Loan Book Growth Loans/GDP Deposits/GDP Loan/Deposits real gdp growth in 2010 real gdp growth in 2010 * Source: Individual countries’ Central Banks, Analyst Research. Data as at 31 December 2010 * Source: Fitch report, IMF data Impaired Loans and Reserve Coverage Equity to Assets and ROAE 40% 88% 168% 57% 120% 65% 48% 56% 90% 96% 30% NM 12.5% NM 11.9% NM 16.3% 6.3% 4.9% 13.5% 35% 25% 30% 25% 20% 33% 20% 15% 15% 21% 10% 20% 10% 17% 5% 12% 12% 13% 14% 14% 5% 9% 9% 11% 11% 4% 6% 7% 8% 8% 0% TUR GEO CZE RUS POL BUL ROM UKR KAZ 0% (1) (1) ROM POL KAZ CZE UKR TUR BUL RUS GEO impaired loans Reserve coverage of Impaired Loans Equity/Assets ROAE •Source: Individual countries’ Central Banks, Analyst Research. Data as at 31 December 2010 unless otherwise stated.* Source: Fitch report; Data as at 31 December 2010 •Note(1) Data as at 31 December 2009. Georgian Banking System ROE is given for 2011 H1 NBG reporting Standard 4
  • 5. Main Regulatory Requirements NBG Main Regulatory Requirements Minimum Reserves •FX minimum reserves from 5% to 15% (From August 2011) •For the borrowings in GEL of more than 1 year and borrowings in FC of more than 2 years not required from August 2011 Capital Requirements •Tier 1 > 8% and Total Capital > 12% •Major difference with Basel is Foreign currency loan weighting at 175% Liquidity Ratio •Liquidity ratio increased from 20% to 30%, (from October 2010) •(NBG has acknowledged prudent liquidity management policy of TBC by Setting lower limit) Yearly Repayment Fee •Early repayment fee of not more than 2% •(May 2011) •Single Related party < 5% of capital Exposure ratios •All related party < 25% of capital •Group exposure < 25 % of capital In additionNo limits or restrictions on the sector or FX policy In the futureNBG is discussing to introduce Loan to Deposit ratio of < 130% and non-resident deposit to total deposit book ratios < 20%. We will meet the requirements if itmaterializes as our Loan to Deposits is forecasted to be at 117% and non resident deposits is less than 5% 5
  • 6. Georgian Banking Sector Growth Dynamics in USD Millions Georgian Banking Sector Loan Growth Over Last 5 Georgian Banking Sector Loan Growth Over Last 5 Years Years Total Loans Growth % Corporate loans Retail Loans 6,901 7,000 6,261 100% 4,500 4,187 5,993 3,847 84% 80% 3,469 5,600 5,185 3,600 4,589 2,993 3,102 60% 2,713 2,524 2,414 4,200 2,700Gel Mln Gel Mln 2,084 40% 2,800 21% 1,800 1,596 20% 20% 1,400 31% 900 0% -13% 0 -20% 0 2007 2008 2009 2010 2011 I H 2007 2008 2009 2010 2011 I H Source: National Bank of Georgia. NBG Reporting Standard Source: National Bank of Georgia. NBG Reporting Standard *Growth Annualized Georgian Banking Sector Deposit Growth Over Last Georgian Banking Sector Deposit Growth Over Last 5 Years 5 Years Total Deposits Growth % Corporate Deposits Retail Deposits 7,000 70% 4,000 65% 5,775 5,488 60% 5,600 3,200 2,846 2,964 2,812 50% 2,641 4,200 3,568 3,950 39%Gel Mln 40% 2,400 2,104 3,215 Gel Mln 1,666 1,859 1,846 2,800 30% 1,549 1,709 1,600 20% 1,400 11% 10% 10% 800 0 0% 11% 2007 2008 2009 2010 2011 I H 0 Source: National Bank of Georgia. NBG Reporting Standard 2007 2008 2009 2010 2011 I H *Growth Annuialized Source: National Bank of Georgia. NBG Reporting Standard 6
  • 7. Georgian Banking Sector – Eight Largest Banks Market SharesQ2 2011Retail Deposits Total Loans Total Deposits 33.1% 36.0% 34.6% 30.0% 25.1% 27.6% 11.8% 8.3% 8.5% 8.1% 6.4% 7.5% 6.1% 6.4% 6.5% 2.5% 3.9% 3.2% 2.4% 3.4% 3.0% 2.0% 2.6% 1.5% All banks, including TBC Standalone, NBG Reporting StandardsNumber of world’s largest financial institutions have partnered with Georgian banks : Y 2000 Y 2002 Y 2004 Y 2006 Y 2008 Y 2010 Y 2011 Q2 7
  • 8. Contents • Georgian Banking Sector • TBC Bank at a Glance • Business lines • Strategy and Forecast • Financials • Capital 8
  • 9. TBC Bank at a GlanceKey Facts About TBC Financial Highlights and Ratios• No 1 by Retail Deposits – 33.1% of market share as at 30 June 2011 (As of and for the Q2 2011) USD m• A leading bank in the country with 25.1% of total customer loans market share Total assets 1,657 as at 30 June 2011 Net loans 1,026• 45 branches, 183 ATMs, 2,414 POS’s across Georgia Customer deposits 972• Number of accounts c. 615,800; Number of employees c. 2,400 Stockholders’ equity 249• Entered microfinance segment in May, 2011 through acquiring Bank Constanta• Presence in Azerbaijan-subsidiary TBC Kredit - non-banking credit organization Financial Ratios ROE annualized (H1 2011) 24.3% Cost to income (H1 2011) 49.2% BIS Tier1 capital adequacy ratio (H1 2011) 19.5% Source: TBC Bank Consolidated IFRS Statements (Unaudited) Exchange Rate Used: USD/GEL 1.6665Ratings Shareholder Structure Fitch Moody’s Georgian Shareholders 35.3% Long Term B+ Foreign Currency B1 European Bank for Reconstruction and Development (EBRD) 20.0%Loan portfolio composition as per the segments – 2-nd Q 2011 International Financial Corporation (IFC) 20.0% Deutsche Investitions-und Entwicklungsgesellschaft (DEG) 11.4%• Corporate • Retail • SME • Micro** JP Morgan 5.0% 4.7% Ashmor 5.0% 49.1% 35.5% 10.7% Netherlands Development Finance Company (FMO) 3.3%Notes: Market shares are NBG Based, * Micro Segment includes Constanta Portfolio, Number ofbranches and number of accounts excludes Constanta 9
  • 10. History 1993 • TBC bank was granted banking license to Conduct International Operations in May 1996 • TBC Bank became a member of the international financial information exchange system S.W.I.F.T. 1997 • The Bank entered into a credit line with the World Bank for a principal amount of U.S.$1 million 1998 • TBC received funds in an amount of U.S.$ 2 million from EBRD, U.S.$ 3 million from IFC and DM 3 million from DEG 1999 • The volume of the Bank’s letter of credit provided by the EBRD was increased by USD 2 million 2000 • IFC and DEG became TBC Bank shareholders, each with a 10% share 2002 • TBC Bank became the principle member of VISA-INTERNATIONAL and started issuing Visa plastic card • EBRD allocated a USD 6 million credit line to the bank 2003 • TBC Bank’s total assets market share increased by 2.9 percentage points from y/e 2002 and reached historical maximum of 19.7 percent market share by y/e 2003 2004 • The Bank’s subsidiary, TBC Leasing began operations • In February the Bank’s new Head Office was opened • TBC Bank’s total assets market share increased by 2.9 percentage points from y/e 2003 and reached historical maximum of 22.6 2005 percentage market share by y/e 2005 • TBC Bank has acquired the license of general member bank from “MasterCard International” 2006 • The Bank entered into a U.S.$35 million loan facility with Citibank • The Bank raised USD 102m funding from J.P. Morgan, Credit Suisse and FMO, that included both senior and subordinated loans 2007 • TBC bank’s market share further increased by 1.1 percentage points from y/e 2005 and reached historical maximum of 23.7 percent • The Bank acquired 75% of the share capital of SOA Credit (currently TBC Kredit LLC), a company incorporated in Azerbaijan • The TBC Bank attracted funds totaling USD 206 million from foreign markets, including following international financial institutions: DEG, FMO, Merrill Lynch, Rose Mount, OTP, Banco International, EBRD, OPIC, CITI Bank 2008 • In order to support the victims of the hostilities, TBC Bank established a charitable organization – “TBC Foundation” and made the initial contribution of GEL 5 million • EBRD, FMO, JP Morgan and Ashmore became the shareholders of TBC Bank • The Bank raised U.S.$ 138.3 m from four international financial institutions: IFC, EBRD, FMO and DEG, that included: Equity 2009 contribution - $39.9m, Senior Loan – $52.3m, and Subordinated Loan - $44m • Recapitalization transactions changed the composition of the Supervisory Board: Each IFI shareholder has its nominee to the Board • The Bank’s growth continued despite the effects of the global financial crisis as reflected by the levels of specific financial indicators as 2010 at 31 December 2010 2011 • In March 2011, the Bank acquired [80]% of the share capital of Bank Constanta, through which it entered the micro-finance segment. • TBC Bank was granted Visa and MasterCard licenses for electronic commerce merchant acquiring 10
  • 11. Current Shareholders Shareholder Structure Founder Shareholders • Mamuka Khazaradze, Chairman of the supervisory board since 1992. Founded TBC-Group and JSC TBC Bank in 1992 EBRD, 20% I F C, 20% • Until the early 2000s, Vice-Chairman of the Supervisory Board of Microfinance Bank of Georgia. • Founded IDS Borjomi Georgia, Borjomi Beverages Co.N.V. Management & • In 2004 he founded Georgian Reconstruction and Development Other Company (GRDC), Two Founder 8% • Founded and served as the Chairman of the Lisi Lake Shareholders, Development and the private high school -The American 28% JPMorgan Academy in Tbilisi. 5% DEG Ashmore 11% 5% FMO 11Source: IFRS Consolidated 3%Statements • Badri Japaridze, deputy chairman of the board since 1992. • IFC Co-Founder of TBC-Group and JSC TBC Bank in 1992 Became a shareholder in May 2000. Eric Rajenda Member of the Supervisory Board nominated by IFC in 2010 • Member of the Board of GeoPlant, the largest Georgian producer • DEG and exporter of green tea. Became a shareholder in May 2000. Steffen Shuhany Member of the • Since the early-2000s, member of the Supervisory Board of both Supervisory Board nominated by DEG in 2007 American Chamber of Commerce in Georgia and EU-Georgia • EBRD Business Council (EUGBC). Became a shareholder in April 2009. Mike Hesketh Member of the • Board Member of Georgian Reconstruction and Development Supervisory Board nominated by EBRD in 2009 Company (GRDC) and Bank Constanta. • FMO • Chairman of the Board of TBC-TV, a Georgian advertising Became a shareholder in April 2009. Mike Hesketh Member of the company, and, Supervisory Board nominated by FMO in 2009 • Chairman of the Board of TBC Kredit, TBC Bank’s subsidiary in • JP Morgan and Ashmore Azerbaijan. Became a shareholder in April 2009, They are entitled (but not required) to send an observer to attend all meetings of the Supervisory Board 11
  • 12. IFI ShareholdersEBRD - 20.0% IFC -20.0%• TotalEBRD Exposure to TBC Bank • Total Exposure to TBC Bank • Senior Loan - USD 71 ml • Senior Loan - USD 31 ml • Subordinated Loan - USD 18.5 ml • Subordinated Loan - USD 20.5 ml• Diversified product range: • SME • Diversified product range: • Mortgage • Subordinated Loan • Energy Efficiency • Senior Loan • Trade Finance • Revolving Facility • RCA • Subordinated Loan • TC Projects • Agro Loan • Various TC projects in different years to strengthen SME • Local Currency Loan financing, Environmental and Social Management System, • Co Financing Agreement Credit Risks, Operational Risks • Revolving Facility• TC Projects • EUR 500,000 worth TC project provided by EBRD in 2010 – 2011 covered 5 modules including: Corporate Recovery, Risk Management, Accounting and Finance, HR, IT. • Ongoing TC project of Trade finance through E-learning • Various TC projects in different years to strengthen SME financing, DEG – 11.4% Environmental and Social Management System, Credit Risks, Operational Risks • Total Exposure to TBC Bank • No Senior Loan • Subordinated Loan - USD 20 mlFMO – 3.3%• Total Exposure to TBC Bank • Diversified product range: • Senior Loan - USD 21 ml • Subordinated Loan • Subordinated Loan - USD 27 ml • Senior Loan • Revolving Facility• Diversified product range: • Subordinated Loan • SME Loan • TC Projects • Mortgage Loan • Various TC projects in different years to strengthen • Revolving Facility Environmental and Social Management System, Credit Risks• TC Projects • TC projects in different years to strengthen ALM 12
  • 13. A Winning Franchise with Robust Performance throughout the Financial Crisis Total Assets Net Loans Net Profit NPLs (PAR 90) 2011 1H* 2,762 (21.8% growth) 2011 1H* 1,710 (23.8% growth) 2011 1H* 48 2011 1H* 0.85% 2010 2,268 (30.5% growth) 2010 1,381 (39.7% growth) 2010 49 2010 1.6% 2009 1,738 2009 988 2009 3 2009 2.6% ROAE ROAA C/I Cost Of Risk 2011 1H* 24% (Annualized) 2011 1H* 3.8% (Annualized) 2011 1H* 49.0% 2011 1H* 0.4% 2010 14% 2010 2.5% 2010 55.1% 2010 2.3% 2009 1% 2009 0.2% 2009 57.9%* 2009 7.2% Awards Banker Award 2010 All Figures in Million GEL Euromoney Award 2011*IFRS Statements Unaudited 2011 Q2*2009 Excludes one-off income of GEL 25900 and one-off expense 4,600 Source: TBC Bank Consolidated IFRS Audited Figures (Unaudited for H1 2011) 13
  • 14. TBC Bank – Distribution Channels Effective Branch Network Keeping up with Modern Day Banking Total Tbilisi Regions Branches 45 Bank of Georgia 133 75 58 Highly-Organized POS Procredit Bank 59 33 26 Call Center 2414 TBC Bank 45 31 14 Internet Banking TBC Pay Bank Republic 37 21 16 66K customers 442 VTB Bank 16 7 9 Mobile Banking 6.5K customers Source: TBC Bank Internal Figures Net Loans and Deposits/Number of Branches* The Best Employer in the Market  “The Most Desired Employer in Georgia” - according to on-line Net Loans/Number of Branches Total Customar Deposits/Number of Branches survey held by National Credit Information Bureau 50 40 36 35 Superior Customer ExperienceGEL Mln 30 100.0% 95.0% 20 17 17 90.0% 13 11 10 10 9 85.0% 10 8 80.0% 0 75.0% TBC BOG VTB Republic Procredit 2008-I 2008-II 2009-I 2009-II 2010-I 2010-II 2011-I TBC BOG Republic ProCredit Source: *NBG Based for comparison for 1H 2011 Source: TNS Georgia 2011 report 14
  • 15. Sustainable Growth Total Gross Customer Loans Total Customer Deposits Corporate Loans Retail Loans Growth % Corporate Deposits Retail Deposits Growth % 120% 45% 50% 1,600 41% 100% 45% 1,600 38% 98% 775 40% 80% 1,200 35% 572 952 1,200 509 60% 30% 852 Gel Mln 314 413 40% 25% 32%Gel Mln 800 17% 19% 800 56% 21% 20% 671 20% 25% 437 511 1,095 15% 159 946 976 0% 400 244 8% 400 854 756 668 10% -20% 513 432 308 343 334 321 5% -20% 0 -40% 0 0% 2006 2007 2008 2009 2010 2011 Q2 2006 2007 2008 2009 2010 2011 Q2 Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011) Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011) Total Loans Market Shares Total Deposits Market Shares * 30% 30% 27.63% 28% 26.70% 26.60% 26.70% 1.63 % 24.22% 25.13% 3.14 % 23.80% 26.00% 25.60% 25% 23.38% 22.78% 26% 21.99% 24% 20% 22% 15% 20% 10-Mar 10-Jun 10-Sep 10-Dec 11-Mar 30-Jun 10-Mar 10-Jun 10-Sep 10-Dec 11-Mar 30-Jun * Excludes Railway Transfer of USD 250m Source: NBG, NBG Reporting Standard Source: NBG, NBG Reporting Standard 15
  • 16. Contents • Georgian Banking Sector • TBC Bank at a Glance • Business lines • Strategy and Forecast • Financials • Capital 16
  • 17. Universal Bank with Diverse Customer Base Corporate SME Retail Micro **** Loans > USD 1,5m Or Loans < USD 1,5m Or All Individual Total Portfolio of Turnover => GEL 8m Turnover < Customers Constanta Loans < GEL 8m USD 150KCustomer Loans 918 176 687 88(Gel Mln)Customer Deposits* 506 162 945 7(Gel Mln)# of accounts (‘000)** 3.5 23.2 508 14Net Income (Gel 28.1 8.1 11.0 1.2*****Mln)*** 2008 2009 2010 2011 Q2 2008 2009 2010 2011 Q2 2008 2009 2010 2011 Q2 2008 2009 2010 2011 Q2 % of Loans 54 52 52 49 13 13 10 9 33 35 38 37 N/A N/A N/A 5 % of Deposits 29 23 28 31 11 9 10 10 60 68 62 58 N/A N/A N/A 0.4Source: 2010 TBC Bank audited consolidated IFRS Figures, SME Deposits – Internal Data (H1 2011 unaudited)Notes: *Customer Deposits Internal Data, **Number of Accounts Internal Data - excluding accounts with zero balances, *** Net Income Internal Data, **** Bank Constanta Data, *****Bank Constanta Standalone Profit, consolidated by TBC as at H1 2011 will be only 0.5 mln Note: figures exclude Minority shares 17
  • 18. Corporate & SME Banking Corporate Corporate Loans & Deposits Defined as loans more than USD 1.5 m and turnover minimum GEL 8 m Corporate Loans Corporate Deposits 2nd position in the market by loan and deposit portfolio size as well as by the Market Share CL Market Share CD number of clients 1,200 30% c. 1,400 clients, 4,240 accounts, 760 loans 27% 23% 24% 26% 1,000 25% Strong industry expertise. Especially strong presence in following industries: 22% 800 20% 18% 20% Energy, Consumer Product and Services , Oil and Gas, Food and Drinks, 18% Gel mln Construction 600 506 15% 377 918 Convenient Service Model in the head office and major branches, Bank- 400 802 252 812 10% 604 229 Client, Internet Banking, Call Centre. 81%* of non cash transactions are 200 5% performed by e-channels The strongest brand and most appropriate image 0 0% Diversified product: Trade Finance, Asset Finance, Project Finance, Working 2008 2009 2010 2011 Q2 Surce: TBC Bank Consolidated IFRS Statement (derived from audited statement, H1 2011 unaudited). Capital, Syndicated Loans market Shares TBC Standalone NBG Reporting based SME SME Loans & Deposits Defined as loans up to USD 1.5 m and turnover up to GEL 8 m SME Loans SME Deposits No 1 by SME Deposits – 149 mln GEL vs 118 mln GEL PCB total Corporate** 250 No 2 by SME Loans – 176 mln GEL vs 386 mln GEL of PCB** 198 200 176 c. 26000 customers, 44,000 accounts, 1,200 loans 153 153 162 150 136 Gel mln Customers can access 45 branches across all major cities with the highest service quality that is expressed in bright and comfortable environment, 91 100 82 politeness and high qualification of staff and quick service Strong presence in following industries: Consumer Product and Services, 50 Food and Drinks, Real Estate, Health care and Construction etc 0 Convenient Internet banking, Bank-Client, Internet Banking, Call Centre. 2008 2009 2010 2011 Q2 87%* of non cash transactions are performed by e-channels* TBC bank Standalone Surce: TBC Bank Consolidated IFRS Statement (derived from audited statement, H1 2011 unaudited).** SME market position based on TBC Bank Standalone NBG standard reporting 18
  • 19. Retail & Micro Banking Retail Segment Retail Loans & Deposits Defined as all individual customers Retail Loans Retail Deposits  Number 1 in Deposits, 2nd in Loans Market Share RD Market Share RL  45 branches, 183 ATMs, 2414 POS’s across Georgia  c.567,500 accounts, c. 512,800 Debit Cards, c.5,500 mortgages 1,500 40%  942 VIP customers, separate service and products for VIPs with Personal 31.4% 31.8% 33.1% 35% 1,200 Bankers 27.0% 30% 24.2%  The highest Service quality in the branches that is expressed in bright and 23.2% 25% Gel Mln 900 comfortable environment, politeness and high qualification of staff and 19.8% 20.1% 687 584 20% quick service 600 486 413 15%  Significant multi channel capabilities including internet banking, SMS 852 945 10% 300 671 banking, TBC Cash in and call centre. 40%* cash in and 61%* of non cash 511 5% transactions are performed by e-channels 0 0%  The strongest brand and most appropriate image 2008 2009 2010 2011 Q2 Source: TBC Bank Consolidated IFRS Figures (Unaudited H1), NBG standards for market share information. Micro Segment Micro Loans Recently acquired bank focused purely on micro finance segment with the strongest image and the best developed expertise in the segment Total Loans Market Share  4-th in the micro loans 90 1.25% 1.4%  c. 442 employees, assets of GEL 114 m (2Q 2011) 75 1.10% 1.2% 1.02% 0.95%  c. 14,000 accounts, 25,000 loans 60 1.0%  22 branches across the country, specific products for microfinance in rural Gel Mln 0.8% 45 88 areas 0.6% 69 30 58  Well-diversified high quality credit portfolio 53 0.4% 15 0.2% 0 0.0% 2008 2009 2010 2011 Q2*Note: TBC Bank Standane Source: bank Constanta IFRS Figures (Unaudited H1), NBG standards for market share information. 19
  • 20. Contents • Georgian Banking Sector • TBC Bank at a Glance • Business lines • Strategy and Forecast • Financials • Capital 20
  • 21. A Fine-tuned StrategyMain Targets 2011 Q2 Medium Term Targets Segment Aspirations 2011 Q2 Medium Term Targets Deposits 33.1% 33.5%ROE 24.3% 20% Retail Loans 24.2% 25.3% Deposits 100% 120%Cost to income (without Provisions) 49.6% 51.0% SME PCB* PCB* Loans 42% 43%Market Share in deposits 27.6% 28.6% Deposits 22.4% 24.7% Corporate Loans 25.7% 25.8%Market Share in loans 25.1% 26.3% Micro Loans/Constanta Loans 7% N/A Strategic Initiatives Description • Implement the best (functionality and design) Multichannel platform in the1. Establish the Best Multichannel Service and Sales Model region. (Including internet-banking, mobile/Ipad –banking. Actively, promote sales and service though the e-channels • Replacement of the core banking software applications (Includes: cards, loans2. Achieve Breakthrough in Automation and Quality of Processes to and deposits modules), development of a single customer view to furtherImprove Customer Satisfaction enhance customer experience and decrease cost per transition. • Form foreign representatives offices, create organizational system for direct3. Become Number One in Non-Resident Deposit Portfolio sales , Improve products and procedures and improve technological channels and communication to attract non-resident deposit.hence support growth and decrease cost of funding. • Increase market penetration by opening branches in rural areas, develop new products and services, tasilored to microfinance segment, laverage from TBC4. Microfinance Segment Development Bank knowledge and experitese for synergy effect, develop cross selling capabilities between TBC and Constanta Source: TBC Bank IFRS Statement (Unaudited 2011 H1), Medium Term targets from *ProCredit Bank Internal Data 21
  • 22. Contents • Georgian Banking Sector • TBC Bank at a Glance • Business lines • Strategy and Forecast • Financials • Capital 22
  • 23. Rapid Post Crisis RecoveryOperating Efficiency Provision Expenses 250 55.1% 60% 300 14.9% 16% 49.6% 236 44.1% 52.9% 50% 14% 200 250 211 211 12% 40% 200 150 10% 196 7.2% 30% 150 8% Gel MlnGel Mln 100 116 123 107 112 20% 6% 100 61 2.3% 4% 50 0.4% 10% 50 94 4 2% 31 0 0% 0 0% 2008 2009 2010 2011 1H 2008 2009 2010 2011 1H Net Revenue Non-Operating Expenses Cost to Income Loan Provision Expense Cost of Risk Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011). Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011). Note: 2009 Cost to Income Ratio excludes extraordinary incomeNet Income, ROAE Net Income, ROAA 60 60 3.8% 24% 2.5% 40 40 20% 0.2% 20 49 48 49 48 20 -3.2% 3 3Gel Mln Gel Mln 0 0 14% -20 0% -20 -58 -58 -40 1% -40 -60 -60 -80 -20% -20% -80 -10% 2008 2009 2010 2011 1H 2008 2009 2010 2011 1H Net Income ROAE, annualized Net Income ROAA, annualized Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011). Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011). 23
  • 24. Well Diversified Loan Book Loan Book – Historical Data Loans by Currency, 2011, June 30 2000 1,869 120% 1,548 2% 1600 9% 100% 1,169 18% 80% 1200 42% 37% Retail FC 9% 17% 70% SME 60% 80% 35% 10% 86% 800 GEL 49% Corporate 13% 49% 40% 53% 400 20% 52% 30% 14% 20% 0 0% 2009 2010 2011 Q2 RB CB Total Source: Audited IFRS Statements, Unaudited data for 2011 Q2 Consolidated Audited IFRS figures, unaudited data for 2011 Q2 Corporate Loans RB Loans SME Loans Financial service, Development Healt Care, 4% and real estate Pawn-Shops, 7% 8% realization, 8% Financial Transport and Real Estate, Energy, 9% service, 3% Logistics, 4% 19% Other, 23% Oil and gas, 2% Other, 8% Agriculture, 1% Consumer, 23% Raw Construction, Consumer Communication, Mortgage, 49% Materials, 3% 13% Service and 11% Product, 17% Consumer Oil and gas, Service and Food and 13% Credit Cards, Product, 30% drink, 11% 14% Fast consumer, 5% Food and drink, 7% Cash Construction, 8% Covered, 3% Source: TBC Bank Standalone NBG Reporting StandardSource: TBC Bank Standalone NBG Reporting Standard Source: TBC Bank Standalone NBG Reporting Standard As of June 30 As of June 30 As of June 30 24
  • 25. Concentration and Quality of The Loan Book Provision Level to Gross Loans and NPL Coverage Loan Concentration to Gross Loans Provision Level To Gross Loans NPL + restructured loans coverage ratio 20 Largest Borrowers Single Largest Borrower50% 140% 50% 126% 120%40% 40% 116% 100%30% 30% 27% 80% 23% 24% 25% 84% 68% 60%20% 15.47% 20% 11.51% 10.81% 40% 8.57%10% 10% 20% 3% 2% 3% 3%0% 0% 0% 2008 2009 2010 2011 1H 2008 2009 2010 2011 1H Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011) Source: TBC Bank Internal Data NPLs* to Gross Loans Related Party Loans to Capital NPLs Gross Loans NPLs+Restructured Loans to Gross Loans All Related party Loans Top 1 Related party Loan 50% 50% 40% 40% 30% 30% 22% 18.4% 20% 17.0% 20% 9.3% 13% 10% 6.8% 10% 8% 7% 6% 3.6% 2.6% 1.6% 2% 4% 2% 0.8% 0% 0% 2008 2009 2010 2011 1H 2008 2009 2010 2011 1H Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011) Source: TBC Bank Internal Data *NPLs are defined as Loans overdue more than 90 days 25
  • 26. Strong and Growing Funding BaseLiabilities Structure, 2011, Q2 Deposits by Type Subordinated Due to other Current/settlement accounts Term deposits debt, 6% banks, 5% Other liabilities, 2,000 2% 1,620 1,600 1,365 Other borrowed 991 funds , 17% 1,200 48% 845 45% Customer 800 48% Accounts, 69% 43% 52% 400 57% 52% 55% 0 2008 2009 2010 2011 1H Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011); Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011);Deposits by Currency Deposit Portfolio Concentration (M GEL) GEL FC Loans to Deposits Ratio 20 Largest Deposits All Related Party Deposits 1,6202,000 200% 50% 1,365 180% 172% 160%1,600 118% 115% 140% 40% 113% 120% 100%1,200 991 76.1% 80% 30% 845 73.3% 60% 40% 18.2% 800 20% 20% 16.3% 17.9% 74.0% 0% 77.28% -20% 11.3% 400 -40% 10% 23.9% -60% 26.0% 27.7% -80% 1.1% 0.9% 0.7% 0.8% 22.72% 0 -100% 0% 2008 2009 2010 2011 1H 2008 2009 2010 2011 1H Source: TBC Bank Consolidated IFRS Audited Figures (Non-Audited for H1 2011); Source: TBC Bank Internal Data 26
  • 27. Contents • Georgian Banking Sector • TBC Bank at a Glance • Business lines • Strategy and Forecast • Financials • Capital 27
  • 28. Strong Capital BaseBIS Capital Adequacy Ratios NBG Capital Adequacy Ratios50% 50% Minimum Requirement of Total Capital Adequacy – 12%45% 45% Minimum Requirement of Tier I Capital Adequacy – 8%40% 38.20% 40%35% 35% 30.00%30% 25.3% 25.80% 30%25% 21.4% 25% 22.80% 18.80% 19.5% 17.60%20% 20% 16.3% 13.3% 10.90% 12.2% 13.44%15% 15% 11.1% 10.3%10% 10% 5% 5% 0% 0% 2008 2009 2010 2011 1H 2008 2009 2010 2011 1H Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio Source: TBC Bank Consolidated IFRS Audited Figures (Unaudited IFRS 2011 1H) Source: TBC Bank Standalone NBG Reporting Standard, (Unaudited IFRS 2011 1H) Main Difference between BIS and NBG Capital Adequacy Rations  Foreign Currency Loans are weighting - 175% for NBG regulations  General Loan Reserve are included in NBG Capital  Revaluation Reserve is included in BIS Capital 28