Liberty Bank reported strong growth in Q4 2013 and full-year 2013. Net income grew 234.6% in Q4 2013 and 229.4% for the full year. Total assets increased 54.3% in 2013, with net loans and client balances & deposits growing 56.1% and 65% respectively. The bank's market share expanded across key metrics as it continued its turnaround that began in 2009.
Monthly Economic Monitoring of Ukraine No 231, April 2024
Liberty Bank announces Q4 2013 results
1. Tbilisi, 10 February 2014
The following exchange rates have been used for the translation of the Bank’s financial statements.
31 December 2013 30 September 2013 31 December 2012
GEL/US$ Period End Exchange Rate 1.74 1.66 1.66
Q4 2013 Q3 2013 Q3 2012 2013 2012
GEL/US$ Period Average Exchange Rate 1.69 1.66 1.66 1.66 1.65
All numbers in this news report are preliminary IFRS-based unaudited estimates. The bank’s actual results may vary significantly from the figures reflected in this news report as a result of various factors. Growth rates have been calculated based on unaudited GEL results.
About Liberty Bank
Established in 2002, Liberty Bank (GSE: BANK) is the third largest bank in Georgia by total assets, with 7.7% market share as of 31 December 2013. Liberty Bank has the largest retail footprint in Georgia, comprising 603 branches and distribution outlets and 342 ATMs, and
serves approximately 1.4 million individuals and over 66 thousand legal entities.
Liberty Bank has, as of the date hereof, the following credit rating: For further information please visit www.libertybank.ge or contact:
FitchRatings Long-term IDR Short-term IDR Lado Gurgenidze George Arveladze Tamuna Gunia
‘B’ ‘B’ Executive Chairman Chief Executive Officer Head of Investor Relations
Telephone: +995 599 477 272 Telephone: +995 599 148 460 Telephone: +995 591 205 511
Email: lado.gurgenidze@libertybank.ge Email: george.arveladze@libertybank.ge Email: ir@libertybank.ge
This news report is presented for general informational purposes only and should not be construed as an offer to sell or the solicitation of an offer to buy any securities. Certain statements in this news report are forward-looking statements and, as such, are based on the
management’s current expectations and are subject to uncertainty and changes in circumstances.
Liberty Bank Announces Unaudited IFRS-based Q4 2013 And Full-Year 2013 Results
CONSOLIDATED RESULTS Q4 2013 Change
IFRS-Based, Consolidated, Unaudited US$ mln GEL mln Q-o-Q Y-o-Y
Total Operating Income (Revenue) 16.7 28.1 21.1% 31.3%
Total Recurring Operating Costs 12.5 21.0 12.0% 14.8%
Net Normalised Operating Income 4.2 7.1 59.8% 129.2%
Pre-Provision Operating Profit 4.2 7.2 61.5% 74.1%
Net Provision Expense (0.7) (1.3) NMF NMF
Pre-Tax Profit 3.9 6.5 11.1% 106.8%
Accrued Or Paid Income Tax Benefit/(Expense) (0.6) (1.0) 12.1% NMF
Current Deferred Tax Benefit 3.0 5.1 NMF NMF
Net Income (Loss) 6.3 10.6 113.4% 234.6%
As of 31 December 2013 Q4 2013 Change
IFRS-Based, Consolidated, Unaudited US$ mln GEL mln Q-o-Q Y-o-Y
Total Assets 745.6 1,294.6 1.3% 54.3%
Net Loans 336.1 583.6 14.8% 56.1%
Client Balances & Deposits 655.7 1,138.5 1.1% 65.0%
Total Liabilities 679.8 1,180.4 0.9% 59.5%
Total Shareholders’ Equity 65.8 114.2 6.0% 15.8%
Basic Book Value Per Ordinary Share (GEL & US$) 0.0114 0.0198 5.3% 11.5%
CONSOLIDATED RESULTS 2013 Change
IFRS-Based, Consolidated, Unaudited US$ mln GEL mln Y-o-Y
Total Operating Income (Revenue) 54.2 90.1 -1.9%
Total Recurring Operating Costs 44.3 73.7 10.3%
Net Normalised Operating Income 9.8 16.4 -34.5%
Pre-Provision Operating Profit 9.8 16.3 -36.4%
Net Provision Expense (0.05) (0.1) NMF
Pre-Tax Profit 8.5 14.1 44.4%
Accrued Or Paid Income Tax Benefit/(Expense) (1.3) (2.1) NMF
Current Deferred Tax Benefit 3.1 5.1 NMF
Net Income (Loss) 10.3 17.1 229.4%
JSC Liberty Bank (the “Bank”) announced today its Q4 2013 and full-year 2013 consolidated results (IFRS-based, unaudited, based on management
estimates), reporting Net Income of GEL 10.6 million in Q4 2013 (up 234.6% y-o-y) and Net Income of GEL 17.1 million in 2013 (up 229.4% y-o-y).
Total Operating Income & Pre-Provision Operating Profit Net Income
17.4
21.4
23.2
28.1
0.5
4.2 4.4
7.2
-
5
10
15
20
25
30
Q1 2013 Q2 2013 Q3 2013 Q4 2013
GEL mln
Total Operating Income Pre-Provision Operating Profit
0.2
1.3
5.0 5.5
5.1
-
2
4
6
8
10
12
Q1 2013 Q2 2013 Q3 2013 Q4 2013
GEL mln
Net Income/(Loss) Reversal of impaired deferred tax asset
2. Tbilisi, 10 February 2014
Page 2 of 12
Superior Growth Rates Since The Commencement Of Its Turnaround In October 2009 Maintained Through 2013 …
Y-o-Y 2013 Sep '09 - Dec ‘13
Source: company data, the NBG Source: company data, the NBG
Total Assets grew 54.3% y-o-y and 1.3% q-o-q on a consolidated basis to GEL 1,294.6 million.
Total Assets Growth 2013 2012 2011 Sep '09-Dec ‘13
Liberty Bank 54.3% 14.4% 38.1% 365.5%
The Georgian Banking Sector 20.3% 13.2% 20.0% 119.3%
Net Loans grew 56.1% y-o-y and 14.8% q-o-q on a consolidated basis to GEL 583.6 million.
Net Loan Book Growth 2013 2012 2011 Sep '09-Dec ‘13
Liberty Bank 56.1% 16.6% 105.1% 660.1%
The Georgian Banking Sector 21.4% 12.8% 27.0% 117.9%
The Bank disbursed, in Q4 2013, GEL 351.8 million worth of loans.
Total 2013 Total 2012 Total 2011 Total 2010 Cumulative Since Sep ‘09
Number of loans disbursed by Liberty Bank 2,265,501 1,904,773 1,281,043 1,156,631 6,894,295
Volume of loans disbursed by Liberty Bank, GEL million 1,142 699.6 631.0 375.6 2,912
Liberty Bank Market Share By Net Loans 6.3% 4.7% 4.5% 2.9% NMF
Client Balances & Deposits increased by 65.0% y-o-y and 1.1% q-o-q on a consolidated basis to GEL 1,138.5 million, driven by growth in both retail
and corporate client balances & deposits.
Client Balances & Deposits Growth 2013 2012 2011 Sep '09-Dec ‘13
Liberty Bank 65.0% 16.7% 65.1% 632.3%
The Georgian Banking Sector 26.5% 13.4% 22.9% 177.6%
…And Resulted In The Continued Improvement Of The Market Position
As at 31 December 2013, the Bank held market shares of 7.7%, 6.3% and 11.8% by Total Assets, Net Loans and Client Balances & Deposits,
respectively*. The respective market shares as at 30 September 2009 were 3.5%, 1.7% and 5.8%.
Liberty Bank’s Market Share Evolution
Market Share
By Total Assets
Market Share
By Net Loans
Market Share By Gross
Loans
Market Share
By Client Balances &
Deposits
Market Share
By CBDs of Individuals
*Market share data are based on the standalone accounts as reported to the NBG
As at 31 December 2013, the Bank’s competitive position in the Georgian banking sector is as follows:
December 2013 December 2012 December 2011 December 2010 September 2009
Total Assets 3rd largest bank 4th largest bank 4th largest bank 5th largest bank 7th largest bank
Net Loans 5th largest bank 5th largest bank 5th largest bank 7th largest bank 9th largest bank
Total Deposits & Balances 3rd largest bank 3rd largest bank 3rd largest bank 5th largest bank 6th largest bank
Corporate Client Balances & Deposits 3rd largest bank 3rd largest bank 3rd largest bank 5th largest bank 4th largest bank
Individual Client Balances & Deposits 3rd largest bank 4th largest bank 5th largest bank 5th largest bank 5th largest bank
Market share data are based on the standalone accounts as reported to the NBG
54.3% 56.1%
65.0%
20.3% 21.4%
26.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Total Assets Net Loans Client Balances & Deposits
Liberty Bank Growth Y-o-Y 2013 (in GEL) Georgian Banking Sector Growth Y-o-Y 2013 (in GEL)
365.5%
660.1%
632.3%
119.3% 117.9%
177.6%
0.0%
100.0%
200.0%
300.0%
400.0%
500.0%
600.0%
700.0%
Total Assets Net Loans Client Balances & Deposits
Liberty Bank Growth In Sep '09-Dec '13 (in GEL)
Georgian Banking Sector Growth In Sep '09-Dec '13 (in GEL)
1.7%
1.9%
2.9%
4.5% 4.7%
6.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Sep '09 YE 09 YE 10 YE 11 YE 12 YE '13
2.2%
2.9%
4.9%
8.8%
9.8%
12.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Sep '09 YE 09 YE 10 YE 11 YE 12 YE '13
5.8%
6.2%
7.0%
8.7% 9.0%
11.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Sep '09 YE 09 YE 10 YE 11 YE 12 YE '13
5.1%
4.4%
6.1% 6.2%
7.6%
10.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Sep '09 YE 09 YE 10 YE 11 YE 12 YE '13
3. Tbilisi, 10 February 2014
Page 3 of 12
Q4 2013 Consolidated Performance Highlights
Total Operating Income Total Assets
Recurring Operating Costs Net Loans
Pre-Provision Operating Profit Gross Loans To Individuals
Net Income/(Loss) Client Balances & Deposits
Q4 2013 Financial Highlights
Net Interest Income increased by 33.8% q-o-q and 42.4% y-o-y to GEL 19.8 million, driven mainly by an increase in the loan book which grew by
14.8% q-o-q, compared to 11.3% growth q-o-q for the banking sector. Interest Income increased by 16.3% q-o-q and 46.6% y-o-y to GEL 47.4 million
in Q4 2013, whereas Interest Expense grew by 6.2% q-o-q and 49.7% y-o-y in Q4 2013 to GEL 27.6 million. As a result of the growth in Interest
Income, Net Interest Margin increased to 8.09% in Q4 2013 from 7.35% in Q3 2013. Net Fee & Commission Income amounted to GEL 5.9 million, a
decrease of 1.2% q-o-q and an increase of 9.7% y-o-y. Total Operating Income in Q4 2013 reached GEL 28.1 million, an increase of 21.1% q-o-q and
31.3% y-o-y. Recurring Operating Costs increased by 12.0% q-o-q and 14.8% y-o-y to GEL 21.0 million, resulting in the positive Operating Leverage
of 16.5% in Q4 2013. Normalised Cost/Income Ratio decreased to 82.0% in Q4 2013 from 83.1% in Q3 2013 and from 91.1% in Q4 2012. The Bank
reported Normalised Net Operating Income of GEL 7.1 million in Q4 2013, increased by 59.8% q-o-q and decreased by 129.2% y-o-y.
Pre-Provision Operating Profit increased by 61.5% q-o-q and 74.1% y-o-y to GEL 7.2 million in Q4 2013. As a result of the efforts of the Bank’s
management, the Bank has recovered certain previously written-off loans, which resulted in the net provision recoveries of GEL 1.3 millon in Q4
22.4
25.2
22.9
21.4
17.4
21.4
23.2
28.1
-
5
10
15
20
25
30
Q1 Q2 Q3 Q4
GEL mln
2012 2013
808.2 836.6
899.9
838.9
958
1,137
1,278 1,295
-
200
400
600
800
1,000
1,200
1,400
Q1 Q2 Q3 Q4
GEL mln
2012 2013
+54%
15.9
16.9 17.0
19.5
16.9 17.0
19.3
23.0
-
5
10
15
20
25
Q1 Q2 Q3 Q4
GEL mln
2012 2013
335.6
385.8
406.7
374.0392.8
447.8
508.4
583.6
-
100
200
300
400
500
600
700
Q1 Q2 Q3 Q4
GEL mln
2012 2013
+56%
7.2
8.9
5.5
4.1
0.5
4.2 4.4
7.2
-
1
2
3
4
5
6
7
8
9
10
Q1 Q2 Q3 Q4
GEL mln
2012 2013
374.3
430.8
455.3
368.9
392.6
440.4
496.0
579.8
-
100
200
300
400
500
600
700
Q1 Q2 Q3 Q4
GEL mln
2012 2013
+57%
2.9
-1.4
0.5
3.2
0.2
1.3
5.0
10.6
(2)
-
2
4
6
8
10
12
Q1 Q2 Q3 Q4
GEL mln
2012 2013
685.4 679.3
627.0
690.0
825.5
996.7
1,126.1 1,138.5
-
200
400
600
800
1,000
1,200
Q1 Q2 Q3 Q4
GEL mln
2012 2013
+65%
4. Tbilisi, 10 February 2014
Page 4 of 12
2013 as compared to Net Provision Expense of GEL 0.3 million in Q4 2012. Pre-Tax Profit increased by 11.1% q-o-q and 106.8% y-o-y to GEL 6.5
million in Q4 2013. Net Income in Q4 2013 reached GEL 10.6 million, up 113.4% q-o-q and 234.6% y-o-y.
As at 31 December 2013, the Bank’s consolidated Total Assets reached GEL 1,294.6 million, up 1.3% q-o-q and 54.3% y-o-y. The Liquidity Ratio
(Liquid Assets divided by Total Assets) stood at 41.0% as at 31 December 2013, down from 46.7% as at 30 September 2013 and up from 34.9% as at
31 December 2012. Gross Loans grew by 16.3% q-o-q and 60.7% y-o-y to GEL 652.6 million, driven by an increase in retail, as well as SME lending.
Net Loans increased by 14.8% q-o-q and 56.1% y-o-y to GEL 583.6 million as at 31 December 2013. The Net Loans/Total Assets ratio increased to
45.1% as at 31 December 2013 from 39.8% as at 30 September 2013. Client Balances & Deposits reached GEL 1,138.5 million as at 31 December
2013, up 1.1% q-o-q and 65.0% y-o-y. Consolidated Shareholders’ Equity as at 31 December 2013 equalled GEL 114.2 million, up 6.0% q-o-q and
15.8% y-o-y.
The Capital Adequacy Ratio (as per the current NBG methodology) reached 13.5% as at 31 December 2013. The Bank was compliant, as of 31
December 2013, with the prudential capital adequacy ratios.
2013 Consolidated Performance Highlights
Total Operating Income Total Assets
Recurring Operating Costs Net Loans
Pre-Provision Operating Profit Gross Loans To Individuals
Net Income/(Loss) Client Balances & Deposits
-
10
20
30
40
50
60
70
80
90
100
2009 2010 2011 2012 2013
GEL mln
Total Operating Income State Fees
41.2
64.0
82.8
91.9 90.1State fees discontinued in July 2012
321
531
733
839
1,295
-
200
400
600
800
1,000
1,200
1,400
YE 2009 YE 2010 YE 2011 YE 2012 YE 2013
GEL mln
+303%
42.5
46.8
58.4
69.2
76.3
-
10
20
30
40
50
60
70
80
90
2009 2010 2011 2012 2013
GEL mln
81
156
321
374
584
-
100
200
300
400
500
600
700
YE 2009 YE 2010 YE 2011 YE 2012 YE 2013
GEL mln
+623%
12.8
17.7
27.3
25.7
16.3
-
5
10
15
20
25
30
2009 2010 2011 2012 2013
GEL mln
60
119
284
369
580
-
100
200
300
400
500
600
700
YE 2009 YE 2010 YE 2011 YE 2012 YE 2013
GEL mln
+864%
-5.4
4.7
7.6
5.2
12.0
5.1
(10)
(5)
-
5
10
15
20
2009 2010 2011 2012 2013
GEL mln
Net Income/(Loss) Reversal of impaired deferred tax asset
203
358
591
690
1,139
-
200
400
600
800
1,000
1,200
YE 2009 YE 2010 YE 2011 YE 2012 YE 2013
GEL mln
+461%
5. Tbilisi, 10 February 2014
Page 5 of 12
2013 Financial Highlights
Net Interest Income increased by 11.1 % y-o-y to GEL 60.6 million. Net Interest Margin decreased to 7.98% in 2013 from 9.0% in 2012. Net Fee &
Commission Income amounted to GEL 21.0 million, down 28.0% y-o-y, with the Net Fee & Commission Income to Total Operating Income (Revenue)
ratio decreasing to 23.3% in 2013 as compared to 31.8% in 2012. Net Fee & Commission Income normalised for the loss of the state fees of GEL 8.5
million received in 1H 2012 but discontinued in July 2012 (the “State Fees”) decreased only by 2.6% y-o-y. Total Operating Income in 2013 reached
GEL 90.1 million, down 1.9% y-o-y. Total Operating Income normalised for the loss of the State Fees increased by 6.4% y-o-y in 2013.
Recurring Operating Costs increased by 10.3% y-o-y to GEL 73.7 million. Normalised Cost/Income Ratio increased to 84.6% in 2013 as compared to
75.4 % in 2012. The Bank reported Normalised Net Operating Income of GEL 16.4 million in 2013, down 34.5% y-o-y. Normalised Net Operating
Income adjusted for the loss of State Fees decreased by 8.1% y-o-y.
Pre-Provision Operating Profit decreased by 36.4% y-o-y to GEL 16.3 million in 2013. Pre-Provision Operating Profit adjusted for the loss of the State
Fees decreased by 11.6% y-o-y in 2013. As a result of the Bank’s management efforts the Bank has reported the net recoveries of loans of GEL 0.2
million in 2013 as compared to Net Provision Expense of GEL 14.2 million in 2012. Pre-Tax Profit increased by 44.4% y-o-y to GEL 14.1 million in
2013. Net Income in 2013 reached GEL 17.1 million, up 229.4% y-o-y. In 2013, the Bank booked the current deferred tax benefit in the amount of
GEL 5.1 million, resulting from the reversal of the previously impaired deferred tax asset. Adjusted for this one-off reversal of the impaired deferred
tax asset (which has not resulted in the corresponding increase in the shareholders’ equity due to a concurrent change in the estimated contingent
tax liability related to the revaluation of the fixed assets in earlier periods) the Bank’s Net Income was GEL 12.0 million.
Monthly Revenue Monthly Pre-Provision Operating Profit
Monthly Gross Loans Monthly Client Balances & Deposits
In the first nine months of 2013, the Bank’s operating profitability suffered from the negative carry, itself a result of the rapid growth in Client Balances & Deposits
from the beginning of 2013 unmatched by the commensurate growth in Gross Loans until Q4 2013.
Gross Loans/Client Balances & Deposits Gross Loans and Client Balances & Deposits Growth, Q-O-Q
Blended Cost Of Funds Cost Of Interest-Bearing Liabilities
5.9 5.8
6.4
6.1
7.1
7.6
7.9
7.5 7.4
7.7
6.8 6.8
5.6 5.7
6.1
6.5
7.0
7.8
8.1
7.7
7.4
9.0 9.2
9.9
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
January
February
March
April
May
June
July
August
September
October
November
DecemberGEL mln
2012 2013
Note: January-June 2012 numbers have been pro-forma adjusted to reflect the loss of the State Fees
1.0
0.9
1.0
0.7
1.7 2.1
2.6
2.0
0.9
1.4
1.6
0.9
0.0 0.0
0.5
0.7
1.2
2.3
2.0
1.4
1.0
2.3 2.2
2.6
(0.5)
-
0.5
1.0
1.5
2.0
2.5
3.0
January
February
March
April
May
June
July
August
September
October
November
December
GEL mln
2012 2013
Note: January-June 2012 numbers have been pro-forma adjusted to reflect the loss of the State Fees
356.3 359.8
374.3
389.2
409.1
430.8
445.9 450.3 455.3 454.2
426.7
406.1
404.0 410.7
427.9
459.5
477.6
489.5
509.5 515.5
561.3
596.3
619.4
652.6
300.0
350.0
400.0
450.0
500.0
550.0
600.0
650.0
700.0
January
February
March
April
May
June
July
August
September
October
November
December
GEL mln
2012 2013
683.0 693.5 685.5 684.9
665.5 679.4
747.8
703.1
627.0 614.9 613.3
690.0
760.6 771.8
825.5
899.5 892.3
996.7
1,035.0
1,052.7
1,126.1
1,186.7
1,222.4
1,138.5
500.0
600.0
700.0
800.0
900.0
1,000.0
1,100.0
1,200.0
1,300.0
January
February
March
April
May
June
July
August
September
October
November
December
GEL mln
2012 2013
58.9%
51.8%
49.1%
49.8%
57.3%
40.0%
45.0%
50.0%
55.0%
60.0%
YE 2012 Q1 '13 Q2 '13 Q3 '13 Q4 '13
4.2%
15.1%
5.7%
-10.8%
5.4%
14.4%
14.7% 16.3%
15.9%
-0.9%
-7.7%
10.0%
19.6%
20.7%
13.0%
1.1%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Q1 Q2 Q3 Q4
Gross Loan Growth In 2012 Gross Loan Growth In 2013
Client Balances & Deposits Growth In 2012 Client Balances & Deposits Growth In 2013
9.05%
9.48%
9.22%
9.29% 9.30% 9.30%
9.10%
8.81% 8.78% 8.83%
9.16%
9.72%
10.09% 10.09%
10.27% 10.29%
9.95%
9.59%
9.47% 9.49%
9.39%
8.95%
8.81%
8.73%
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
January
February
March
April
May
June
July
August
September
October
November
December
2012 2013
11.86% 12.25% 12.24% 12.19%
12.40%
12.13% 12.09% 11.97%
11.18% 11.22%
11.71%
12.16%
12.25% 12.22% 12.34% 12.29%
12.03%
11.54%
11.30%
11.11%
10.95%
10.37%
10.10% 10.21%
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
11.00%
11.50%
12.00%
12.50%
13.00%
January
February
March
April
May
June
July
August
September
October
November
December
2012 2013
6. Tbilisi, 10 February 2014
Page 6 of 12
Loan Book Quality
As at 31 December 2013, loans issued since September 2009 by the new management team (the “Newly Made Loans”) accounted for 97.5% of
Gross Loans;
As of 31 December 2013, 4.6% of the Newly Made Loans (by value) were non-performing (i.e. overdue by more than 90 days);
Loan Loss Reserve (“LLR”) Coverage Ratio applicable to the Newly Made Loans was 91.3% as at 31 December 2013;
Due to repayments (primarily) and cumulative write-offs (GEL 46.5 million since January 2009), the aggregate principal of the loans issued by the
previous management prior to 30 September 2009 (the “Old Loans”) decreased from GEL 98 million as at 30 September 2009 to GEL 16 million
as at 31 December 2013;
As of 31 December 2013, 44.7% of the Old Loans, or GEL 7.0 million, were non-performing;
LLR Coverage Ratio applicable to the Old Loans was 55.3% as at 31 December 2013;
Net Exposure to the Old Loans has been reduced from GEL 80 million as at 30 September 2009 to GEL 12 million as at 31 December 2013;
Coverage Ratio (which includes LLRs and applicable collateral, the value of which has been appraised and validated by professional third parties)
applicable to the Old Loans was estimated at 216.5% as at 31 December 2013; and
The overall Coverage Ratio (LLR and applicable collateral) stood at 145.5% as at 31 December 2013.
Q4 2013 Business Highlights
As of 31 December 2013, the Bank served 157,881 individual clients through the corporate payroll programs administered on behalf of 4,451
corporate and state entities;
Opened more than 4,269 new corporate accounts in Q4 2013, serving, as of 31 December 2013, over 83,000 accounts of corporate and state
entities;
Issued 279,809 debit cards in Q4 2013 (including renewals), bringing the number of debit cards outstanding as of 31 December 2013 to 2,190,346,
up 5% y-o-y;
Issued 66,318 credit cards in Q4 2013 (including renewals), with 79,902 credit cards outstanding as of 31 December 2013;
Processed, in Q4 2013, GEL 268 million worth of international money transfers received, retaining a market-leading position by value of
international money transfers received;
Processed, in Q4 2013, GEL 49 million worth of P2P transfers, of which 0.13% were made through ATMs;
Processed, in Q4 2013, 2,030,297 bill payments in Tbilisi and 2,870,391 bill payments elsewhere in Georgia, with the total number of processed
bill payment transactions up 4% q-o-q; 11.0% of the total bill payment transactions in Q4 2013 were made either with or through PAY® accounts,
up from 10.9% in Q3 2013, and the further 10% were made through the instant payment terminals located in the Bank’s branches;
The number of PAY® cards outstanding reached 463,647 as at 31 December 2013, up 46% y-o-y;
As of 31 December 2013, 593 ATMs and 4,626 POS terminals in Georgia accepted PAY® cards, including, respectively, 251 ATMs and 3,295 POS
terminals not operated by the Bank;
105 mobile Liberty Express branches have been deployed as at 31 December 2013, while the number of stationary branches and distribution
outlets has grown to 498;
As of 31 December 2013, the Bank had 193,264 Mass Market Loans* with the aggregate value of GEL 145 million, outstanding, up from 83,835
Mass Market Loans with the aggregate value of GEL 62.4 million outstanding as of YE 2012
Retail Client Balances & Deposits reached GEL 463.5 million as at 31 December 2013, up 88.3% y-o-y;
Corporate Client Balances & Deposits reached GEL 613.3 million as at 31 December 2013, up 56.5% y-o-y;
Private Banking Client Balances & Deposits reached GEL 61.7 million as at 31 December 2013, up 19.2% y-o-y, and
GEL 34.6 million worth of Certificates of Deposits were issued in Q4 2013.
Gross Loan Portfolio, Standalone
GEL, unless otherwise noted
Loans Issued
Through 30
September 2009
Loans Issued Post-
September 2009
Total Gross
Loans
Loans Issued
Through 30
September 2009
Loans Issued
Post-September
2009
Total Gross
Loans
Loans Issued
Through 30
September 2009
Loans Issued
Post-September
2009
Total Gross
Loans
Respective Loan Book 97,876,641 - 97,876,641 10,661,126 388,282,965 398,944,091 15,603,757 606,032,117 621,635,874
Respective Loan Principal 93,837,784 - 93,837,784 8,793,419 397,285,149 406,078,569 13,042,896 639,538,666 652,581,563
Deferred Income On Loans (1,550,921) - (1,550,921) - (14,500,809) (14,500,809) - (43,175,782) (43,175,782)
Respective Accrued Interest 5,589,778 - 5,589,778 1,867,706 5,498,625 7,366,331 2,560,861 9,669,233 12,230,093
Respective Loan Book As % of Total Gross Loans 100.0% 0.0% 100.0% 2.7% 97.3% 100.0% 2.5% 97.5% 100.0%
Respective NPLs, Principal 34,500,962 - 34,500,962 5,175,573 12,482,064 17,657,636 4,707,782 23,830,056 28,537,838
Respective NPLs, Accrued Interest 3,190,445 - 3,190,445 1,773,874 1,606,451 3,380,325 2,266,290 3,768,185 6,034,475
Total Respective NPLs1,2
37,691,407 - 37,691,407 6,949,447 14,088,514 21,037,961 6,974,072 27,598,242 34,572,313
Respective Total NPLs As % Of Respective Loan Book 38.5% 0.0% 38.5% 65.2% 3.6% 5.3% 44.7% 4.6% 5.6%
Respective Loan Loss Reserve, Principal 15,497,905 - 15,497,905 2,832,483 14,742,486 17,574,969 2,140,228 23,630,147 25,770,376
Respective Loan Loss Reserve, Accrued Interest 2,528,820 - 2,528,820 1,690,784 1,560,214 3,250,998 1,713,250 1,571,847 3,285,097
Total Loan Loss Reserve 18,026,725 - 18,026,725 4,523,267 16,302,700 20,825,967 3,853,478 25,201,995 29,055,473
Cumulative Write-offs3
17,761,421 - 17,761,421 46,446,524 4,631,482 51,078,006 46,508,086 4,651,321 51,159,407
Respective Loan Loss Reserve As % Of Respective Loan Book 18.4% 0.0% 18.4% 42.4% 4.2% 5.2% 24.7% 4.2% 4.7%
Loan Loss Reserve Coverage Ratio (Respective LLR To Respective NPLs) 47.8% 0.0% 47.8% 65.1% 115.7% 99.0% 55.3% 91.3% 84.0%
Net Exposure 79,849,916 - 79,849,916 6,137,858 371,980,265 378,118,123 11,750,279 580,830,123 592,580,402
Appraisal Value Of Collateral Applicable To NPLs 26,135,960 - 26,135,960 6,706,864 5,252,965 11,959,829 11,246,250 9,987,251 21,233,501
Coverage Ratio 2,4,5
117.2% 0.0% 117.2% 161.6% 153.0% 155.8% 216.5% 127.5% 145.5%
December-13September-09 December-12
1
NPLs include loans that are overdue by 90 days or more at the end ofthe respective period as well as certain legacy loans classified by management as such
2
Decrease in the NPLs issued pre-October 2009 is primarily due to write-offs
3
Starting point 1 January 2009
4
Based on third-party appraisal and validation.
5
Respective LLR Plus Appraisal Value OfCollateral Applicable To NPLs Divided By Respective NPLs
Notes:
- Net Exposure equals respective gross loan book less respective loan loss reserve
- Standalone, not audited, derived from management reports
7. Tbilisi, 10 February 2014
Page 7 of 12
2013 Business Highlights
As of 31 December 2013, the Bank served 157,881 individual clients through the corporate payroll programs administered on behalf of 4,451
corporate and state entities;
Opened more than 14,292 new corporate accounts in 2013, serving, as of 31 December 2013, over 83,000 accounts of corporate and state
entities;
Issued 861,896 debit cards in 2013 (including renewals), bringing the number of debit cards outstanding as of 31 December 2013 to 2,190,346 up
5% y-o-y;
Issued 97,460 credit cards in 2013 (including renewals), with 79,902 credit cards outstanding as of 31 December 2013;
Processed, in 2013, GEL 922 million worth of international money transfers received, retaining a market-leading position by value of international
money transfers received;
Processed, in 2013, GEL 172 million worth of P2P transfers, of which 0.18% were made through ATMs
Processed, in 2013, 7,719,633 bill payments in Tbilisi and 10,206,545 bill payments elsewhere in Georgia, with the total number of processed bill
payment transactions up 50% y-o-y; 10.5% of the total bill payment transactions in 2013 were made either with or through PAY® accounts and
the further 10% were made through the instant payment terminals located in the Bank’s branches;
The number of PAY® cards outstanding reached 463,647 as at 31 December 2013, up 46% y-o-y;
As of 31 December 2013, 593 ATMs and 4,626 POS terminals in Georgia accepted PAY® cards, including, respectively, 251 ATMs and 3,295 POS
terminals not operated by the Bank;
105 mobile Liberty Express branches have been deployed as at 31 December 2013, while the number of stationary branches and distribution
outlets has grown to 498;
As of 31 December 2013, the Bank had 193,264 Mass Market Loans* with the aggregate value of GEL 145 million, outstanding, up from 83,835
Mass Market Loans with the aggregate value of GEL 62.4 million outstanding as of YE 2012
Retail Client Balances & Deposits reached GEL 463.5 million as at 31 December 2013, up 88.3% y-o-y;
Corporate Client Balances & Deposits reached GEL 613.3 million as at 31 December 2013, up 56.6% y-o-y;
Private Banking Client Balances & Deposits reached GEL 61.7 million as at 31 December 2013, up 19.2% y-o-y, and
GEL 41.2 million worth of Certificates of Deposits were issued in 2013.
“I wish to congratulate the Liberty Bank team on the Bank’s performance in 2013. We have had a difficult start of the year, due to the negative carry
accumulated in the first few months of 2013. However, as our retail loan disbursements grew rapidly in 2H 2013, the adverse impact of the negative
carry on our Net Interest Income has largely dissipated by the end of the year. As a result, in Q4 2013, our average monthly revenue was GEL 9.4
million, compared to the average monthly revenue of just GEL 5.8 million and GEL 7.1 million in Q1 2013 and Q4 2012, respectively. As the revenue
growth outpaced the growth in operating costs in 2H 2013, our average monthly Pre-Provision Operating Profit in Q4 2013 was GEL 2.4 million,
compared to the average monthly Pre-Provision Operating Profit of just GEL 0.2 million and GEL 1.4 million in Q1 2013 and Q4 2012, respectively.
Our improved profitability in 2H 2013 was further aided by large recoveries of previously written off corporate loans.
The improved operating performance of the Bank in Q4 2013 positioned us well for a confident start of 2014. Based on preliminary January results,
our average monthly revenue in Q1 2014 is expected to exceed GEL 10 million, a material improvement q-o-q and a very sizeable one on a y-o-y
basis. Our average monthly Pre-Provision Profit in Q1 2014 is expected to reach or even exceed GEL 3.3 million, a very significant improvement q-
o-q and a sea change on a y-o-y basis, as the Bank barely broke even in Q1 2013. As our retail lending franchise continues to perform well, our Net
Loans are expected to grow in Q1 2014 by approximately GEL 50 million, which will provide a solid foundation for the further improvement in
operating profitability in Q2 2014, before the capital constraint kicks in once again. Overall, if the management succeeds in reaching its annual
targets, the Bank may be expected to achieve in 2014 ROAE of approximately 12%. This, however, is predicated on being able to sustain the rapid
growth of the loan book, notwithstanding the capital constraint which will become more pronounced later in the year”, commented Executive
Chairman of the Supervisory Board, Lado Gurgenidze.
*Mass Market Loans comprise micro & agro loans, pawn loans, home equity loans, as well as various types of unsecured consumer loans, such as, for instance, Magic
Card balances and instalment loans.
8. Tbilisi, 10 February 2014
Page 8 of 12
Q4 2013 Consolidated Income Statement
Q4 2013 Consolidated Cash Flows From Operating Activities Before Changes In Operating Assets & Liabilities
Notes: (1) Growth calculations are based on GEL values.
(2) US$ values have been derived from period-average GEL/US$ exchange rates set out on Page 1 of this news report.
(3) Interest income from pension advances is recognised on amortised cost basis.
IFRS-based Change, Change,
Q-o-Q Y-o-Y
US$ GEL US$ GEL US$ GEL
Interest Income 28,111,112 47,384,029 24,561,717 40,758,541 19,463,583 32,323,617 16.3% 46.6%
Interest Expense 16,362,462 27,580,531 15,643,973 25,960,136 11,090,445 18,418,155 6.2% 49.7%
Net Interest Income 11,748,650 19,803,498 8,917,744 14,798,405 8,373,138 13,905,462 33.8% 42.4%
Fee And Commission Income 4,017,687 6,772,204 4,104,934 6,811,867 3,696,986 6,139,669 -0.6% 10.3%
Fee And Commission Expenses 505,543 852,141 495,487 822,227 447,554 743,263 3.6% 14.6%
Net Fee and Commission Income 3,512,144 5,920,062 3,609,448 5,989,640 3,249,432 5,396,406 -1.2% 9.7%
Income From Documentary Operations 79,441 133,906 85,267 141,495 113,571 188,609 -5.4% -29.0%
Documentary Operations Expenses 1,746 2,943 3,075 5,103 4,399 7,306 -42.3% -59.7%
Net Income From Documentary Operations 77,695 130,963 82,192 136,392 109,171 181,303 -4.0% -27.8%
Net Other Non-Interest Income/(Loss) 197,540 332,973 149,599 248,250 189,794 315,196 34.1% 5.6%
Net Income From Foreign Exchange & Translation Operations 1,133,233 1,910,176 1,225,074 2,032,930 961,449 1,596,700 -6.0% 19.6%
Net Non-Interest Income 4,920,613 8,294,175 5,066,313 8,407,211 4,509,847 7,489,605 -1.3% 10.7%
Total Operating Income 16,669,263 28,097,673 13,984,058 23,205,616 12,882,985 21,395,068 21.1% 31.3%
Recurring Operating Costs 12,471,265 21,021,537 11,315,474 18,777,278 11,023,940 18,307,708 12.0% 14.8%
Personnel Cost 6,533,346 11,012,593 6,203,972 10,295,080 5,560,399 9,234,282 7.0% 19.3%
Selling, General & Administrative Expense 1,260,816 2,125,229 885,930 1,470,143 1,101,337 1,829,016 44.6% 16.2%
Procurement & Operations Support 1,806,524 3,045,073 1,469,514 2,438,560 1,417,278 2,353,706 24.9% 29.4%
Depreciation, Amortisation & Impairment 1,796,710 3,028,531 1,772,554 2,941,435 1,347,914 2,238,512 3.0% 35.3%
Other Operating Expenses 849,955 1,432,682 775,422 1,286,761 1,372,113 2,278,700 11.3% -37.1%
Various Tax Expenses 223,914 377,429 208,082 345,299 224,897 373,492 9.3% 1.1%
Normalised Net Operating Income 4,197,998 7,076,136 2,668,584 4,428,338 1,859,046 3,087,360 59.8% 129.2%
Non-Recurring Costs/(Income) (47,501) (80,067) (964) (1,600) (616,237) (1,023,400) NMF NMF
Pre-Provision Operating Profit 4,245,498 7,156,203 2,669,548 4,429,938 2,475,283 4,110,759 61.5% 74.1%
Net Provisions (744,619) (1,255,128) (1,138,729) (1,889,646) 186,085 309,035 NMF NMF
(Gain)/Loss On Asset Sale & Recovery (82,158) (138,486) (5,717) (9,486) (343,943) (571,194) 1359.9% -75.8%
Pre-Bonus Result 5,072,276 8,549,817 3,813,994 6,329,070 2,633,142 4,372,918 35.1% 95.5%
Discretionary Bonus Pool 1,195,169 2,014,575 301,308 500,000 716,425 1,189,784 0.0% 69.3%
Share Of Associates' Net Profit/(Loss) (17,503) (29,502) 14,620 24,260 (22,473) (37,321) -221.6% -21.0%
Pre-Tax Profit 3,859,604 6,505,740 3,527,306 5,853,330 1,894,244 3,145,814 11.1% 106.8%
Accrued Or Paid Income Tax Benefit/(Expense) (585,226) (986,456) (530,394) (880,154) 15,432 25,628 12.1% NMF
Current Deferred Tax Benefit 3,021,413 5,092,887 - - - - NMF NMF
Net Income 6,295,791 10,612,171 2,996,911 4,973,176 1,909,676 3,171,442 113.4% 234.6%
Q4 '13
Unaudited
Q4 '12Q3 '13
Unaudited Unaudited
IFRS-based Change, Change,
Q-o-Q Y-o-Y
US$ GEL US$ GEL US$ GEL
Cash flows from operating activities
Interest received 33,308,864 56,145,349 28,944,012 48,030,668 24,219,738 40,222,272 16.9% 39.6%
Interest paid (17,883,788) (30,144,873) (13,437,699) (22,298,970) (12,089,065) (20,076,587) 35.2% 50.1%
Fees and commissions received 3,966,810 6,686,446 4,103,644 6,809,725 3,711,502 6,163,776 -1.8% 8.5%
Fees and commissions paid (486,539) (820,108) (445,315) (738,971) (454,337) (754,527) 11.0% 8.7%
Income from documentary operations 127,251 214,494 85,346 141,627 109,056 181,112 51.5% 18.4%
Expense on documentary operations (1,746) (2,943) (3,075) (5,103) (4,399) (7,306) -42.3% -59.7%
Realised gains less losses from dealing in foreign currencies 1,168,020 1,968,813 1,188,248 1,971,819 934,967 1,552,721 -0.2% 26.8%
Recoveries of assets previously written off 439,321 740,518 4,090,978 6,788,706 91,257 151,553 NMF NMF
Net other income/(loss) received 307,772 518,779 158,861 263,619 199,941 332,047 96.8% 56.2%
Salaries and other benefits paid (5,754,507) (9,699,785) (5,338,111) (8,858,241) (5,254,401) (8,726,104) 9.5% 11.2%
Other recurring operating costs paid (4,076,197) (6,870,829) (3,228,805) (5,357,988) (3,579,222) (5,944,095) 28.2% 15.6%
Income tax expense - - - - - - NMF NMF
Cash flows from operating activities before changes in operating assets and liabilities 11,115,261 18,735,860 16,118,084 26,746,892 7,885,038 13,094,863 -30.0% 43.1%
Q4 2013 Q4 2012
Unaudited Unaudited
Q3 2013
Unaudited
9. Tbilisi, 10 February 2014
Page 9 of 12
2013 Consolidated Income Statement
2013 Consolidated Cash Flows From Operating Activities Before Changes In Operating Assets & Liabilities
Notes: (1) Growth calculations are based on GEL values.
(2) US$ values have been derived from period-average GEL/US$ exchange rates set out on Page 1 of this news report.
(3) Interest income from pension advances is recognised on amortised cost basis.
IFRS-based Change,
Y-o-Y
US$ GEL US$ GEL
Interest Income 96,005,590 159,697,435 76,818,954 126,848,201 25.9%
Interest Expense 59,561,475 99,075,635 43,768,870 72,273,860 37.1%
Net Interest Income 36,444,115 60,621,799 33,050,085 54,574,341 11.1%
Fee And Commission Income 14,475,286 24,078,452 19,342,443 31,939,436 -24.6%
Fee And Commission Expenses 1,843,720 3,066,878 1,664,106 2,747,875 11.6%
Net Fee and Commission Income 12,631,566 21,011,574 17,678,337 29,191,561 -28.0%
Income From Documentary Operations 306,895 510,495 699,741 1,155,455 -55.8%
Documentary Operations Expenses 10,021 16,668 51,989 85,848 -80.6%
Net Income From Documentary Operations 296,874 493,826 647,751 1,069,607 -53.8%
Net Other Non-Interest Income/(Loss) 699,448 1,163,474 641,042 1,058,529 9.9%
Net Income From Foreign Exchange & Translation Operations 4,101,570 6,822,626 3,622,141 5,981,102 14.1%
Net Non-Interest Income 17,729,458 29,491,501 22,589,271 37,300,799 -20.9%
Total Operating Income 54,173,572 90,113,300 55,639,356 91,875,140 -1.9%
Recurring Operating Costs 44,331,616 73,742,012 40,492,070 66,863,006 10.3%
Personnel Cost 23,618,299 39,287,105 21,289,904 35,155,204 11.8%
Selling, General & Administrative Expense 3,855,814 6,413,831 3,773,089 6,230,358 2.9%
Procurement & Operations Support 6,008,478 9,994,610 5,343,950 8,824,260 13.3%
Depreciation, Amortisation & Impairment 6,903,195 11,482,899 6,058,864 10,004,770 14.8%
Other Operating Expenses 3,105,776 5,166,204 3,227,082 5,328,758 -3.1%
Various Tax Expenses 840,055 1,397,362 799,180 1,319,656 5.9%
Normalised Net Operating Income 9,841,957 16,371,288 15,147,286 25,012,134 -34.5%
Non-Recurring Costs/(Income) 38,381 63,843 (387,122) (639,241) NMF
Pre-Provision Operating Profit 9,803,576 16,307,446 15,534,409 25,651,375 -36.4%
Net Provisions (47,899) (79,677) 8,595,240 14,192,990 NMF
(Gain)/Loss On Asset Sale & Recovery (144,679) (240,661) (465,726) (769,036) -68.7%
Pre-Bonus Result 9,996,154 16,627,784 7,404,895 12,227,420 36.0%
Discretionary Bonus Pool 1,511,691 2,514,575 1,440,804 2,379,145 5.7%
Share Of Associates' Net Profit/(Loss) 7,489 12,457 (38,198) (63,076) NMF
Pre-Tax Profit 8,491,952 14,125,666 5,925,892 9,785,200 44.4%
Accrued Or Paid Income Tax Benefit/(Expense) (1,284,938) (2,137,388) (39,978) (66,015) NMF
Impairment Of Deferred Tax Asset - - (2,745,719) (4,533,900) NMF
Current Deferred Tax Benefit 3,061,700 5,092,887 - -
Net Income 10,268,714 17,081,164 3,140,196 5,185,285 229.4%
2013 2012
Unaudited Audited
IFRS-based Change,
Y-o-Y
US$ GEL US$ GEL
Cash flows from operating activities
Interest received 108,200,518 179,982,698 80,293,241 132,585,157 35.7%
Interest paid (53,920,530) (89,692,385) (42,679,459) (70,474,959) 27.3%
Fees and commissions received 14,424,466 23,993,918 19,386,587 32,012,330 -25.0%
Fees and commissions paid (1,774,578) (2,951,865) (1,722,821) (2,844,828) 3.8%
Income from documentary operations 338,731 563,452 794,883 1,312,559 -57.1%
Expense on documentary operations (10,021) (16,668) (51,989) (85,848) -80.6%
Realised gains less losses from dealing in foreign currencies 4,166,220 6,930,166 3,609,472 5,960,184 16.3%
Recoveries of assets previously written off 4,736,691 7,879,098 98,573 162,769 NMF
Net other income/(loss) received 834,224 1,387,664 637,016 1,051,880 31.9%
Salaries and other benefits paid (22,666,749) (37,704,280) (21,647,702) (35,746,022) 5.5%
Other recurring operating costs paid (14,221,350) (23,656,051) (13,086,640) (21,609,468) 9.5%
Income tax expense - - - - NMF
Cash flows from operating activities before changes in operating assets and liabilities 40,107,624 66,715,747 25,631,160 42,323,754 57.6%
2013 2012
Unaudited Audited
12. Tbilisi, 10 February 2014
Page 12 of 12
Ratio Definitions
1 Return On Average Total Assets (ROAA) equals Net Income of the period divided by average Total Assets for the same period;
2 Return On Average Total Equity (ROAE) equals Net Income of the period divided by average Total Shareholders’ Equity for the same period;
3 Average Interest Earning Assets are calculated on a quarterly, half-yearly, nine months or full yearly basis; Interest Earning Assets include: Cash
& Balances With the NBG (with interest accrual), Cash & Balances With Banks, Treasuries, Other Fixed Income Instruments and Gross Loans To
Clients;
4 Cost Of Funds equals Interest Expense of the period divided by average Total Liabilities for the same period;
5 Cost Of Interest-Bearing Liabilities equals Interest Expense of the period divided by average Interest Bearing Liabilities for the same period;
Interest Bearing Liabilities include: Client Balances & Deposits, Borrowed Funds, Contingent Capital Participation Notes and Interbank Deposits;
6 Net Spread equals Interest Income of the period divided by Average Interest Earning Assets for the same period less Cost of Interest Bearing
Liabilities;
7 Net Interest Margin equals Net Interest Income of the period divided by Average Interest Earning Assets for the same period;
8 Net Interest Margin on Average Gross Loans equals Interest Income From Loans less Interest Expense of the period divided by Average Gross
Loans for the same period;
9 Total Operating Income includes Net Interest Income and Net Non-Interest Income;
10 Operating Leverage (Normalised) equals y-o-y percentage change in Total Operating Income less y-o-y percentage change in Total Recurring
Operating Costs;
11 Recurring Earning Power equals Profit (Pre-Bonus) Before Provisions of the period divided by average Total Assets for the same period;
12 Cost/Income (Normalised) equals Total Recurring Operating Costs plus Discretionary Bonus Pool of the period divided by Total Operating Income;
13 Cash Costs/Average Total Assets equals Total Recurring Operating Costs plus Discretionary Bonus Pool less Depreciation & Amortisation of the
period divided by average Total Assets for the same period;
14 Client Balances & Deposits include Corporate & Merchant Banking (CMB), Retail Banking (RB) and Private Banking (PB) client balances & deposits;
15 Total Deposits include Interbank Deposits, Ministry of Finance Deposit and Client Balances & Deposits;
16 Shareholders’ Equity equals to Total Shareholders’ Equity;
17 Liquid Assets include Cash, Cash Balances With the NBG, Cash Balances With Banks, Treasuries and Other Fixed Income Instruments;
18 LLR includes Loan Loss Reserve and Reserve For Interest Receivable;
19 NPLs include loans that are overdue by 90 days or more at the end of the respective period as well as certain legacy loans classified by
management as such;
20 NPL Coverage ratio equals Loan Loss Reserve as of the period end plus collateral appraisal value applicable to NPLs divided by NPLs as of the same
date;
21 Loan Loss Reserve Coverage Ratio equals Loan Loss Reserve as of the period end divided by NPLs as of the same date;
22 Cost Of Risk equals Net Provision For Loan Losses of the period, less provisions for and recovery of other assets, divided by average Gross Loans
To Clients for the same period;
23 Eligible Tier II Capital equals total available Tier II capital less any amounts in excess of Tier I capital. Since Tier I capital was negative for the year
ended 31 December 2009, none of the available Tier II capital has been taken into account for the purposes of Basel Capital I Accord Standards
capital requirement computations;
24 The Tier I capital adequacy ratio calculated in accordance with Basel I Capital Accord Standards. The Tier I capital adequacy ratio of the Bank
equals the Tier I capital divided by the risk weighted assets;
25 Total capital adequacy ratio calculated in accordance with Basel I Capital Accord Standards. The total capital adequacy ratio of the Bank equals
total capital (Tier I +Tier II - deductions) divided by the risk weighted assets.
26 The Tier I and Total Capital Adequacy ratio in accordance with the National Bank of Georgia (the “NBG”) Standards. The NBG is introducing
changes to the Capital Adequacy Requirements for the commercial banks, expected to become effective in June 2014, with 2014 considered a
transitional period. The new regulation shall be in line with Basel II Capital Accord Standards, with elements of Basel III. As a result of the changes
in the interpretation of the new Capital Adequacy Requirements the Tier I and Total Capital Adequacy Ratios of the Bank will change.