liberty bank unaudited ifrs based q4 2013 and 2013 results

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: [email protected] Email: [email protected] Email: [email protected]

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

21.423.2

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

1.35.0 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


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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


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


…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


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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

22.921.4

17.4

21.423.2

28.1

-

5

10

15

20

25

30

Q1 Q2 Q3 Q4

GEL mln

2012 2013

808.2 836.6899.9

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%

15.916.9 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

385.8406.7

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

430.8455.3

368.9392.6

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

685.4 679.3627.0

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%


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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%

42.546.8

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

27.325.7

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%

-5.44.7

7.65.2

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%


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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 5.76.1

6.57.0

7.88.1

7.77.4

9.0 9.2

9.9

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

be

r

Oct

ob

er

No

vem

be

r

De

cem

ber

GEL 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 0.00.5

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

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

be

r

Oct

ob

er

No

vem

be

r

De

cem

ber

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

404.0 410.7427.9

459.5477.6

489.5509.5 515.5

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

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

be

r

Oct

ob

er

No

vem

be

r

De

cem

ber

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

996.71,035.0

1,052.7

1,126.1

1,186.71,222.4

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

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

be

r

Oct

ob

er

No

vem

be

r

De

cem

ber

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%

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

ber

Oct

ob

er

No

vem

ber

Dec

em

ber

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%

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

ber

Oct

ob

er

No

vem

ber

Dec

em

ber

2012 2013


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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 of the 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 Of Collateral 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


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.


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


Q-o-Q Y-o-Y


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


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


of 12

31 December 2013 Consolidated Balance Sheet

Notes: (1) Growth calculations are based on GEL values. (2) US$ values have been derived from period-end GEL/US$ exchange rates set out on Page 1 of this news report.


Q-o-Q Y-o-Y


Cash 62,101,326 107,826,533 59,276,334 98,659,531 51,292,196 84,975,781 9.3% 26.9%

Balances With The NBG 151,151,217 262,443,858 174,967,010 291,215,091 78,503,593 130,056,903 -9.9% 101.8%

Cash Balances With Banks 17,147,459 29,773,133 18,059,179 30,057,697 12,374,238 20,500,401 -0.9% 45.2%

Treasuries & CDs 75,518,401 131,122,599 105,962,284 176,363,626 34,705,873 57,497,220 -25.7% 128.1%

Other Fixed Income Instruments - - - - - - NMF NMF

Gross Loans, Of Which 375,846,088 652,581,563 337,245,848 561,311,989 245,112,916 406,078,569 16.3% 60.7%

Loans To Banks - - - - - - NMF NMF

Loans To Clients 375,846,088 652,581,563 337,245,848 561,311,989 245,112,916 406,078,569 16.3% 60.7%

CMB Loans, Gross 41,739,624 72,472,509 39,048,945 64,993,063 22,072,619 36,567,708 11.5% 98.2%

CMB Loan Loss Provisions (2,009,573) (3,489,222) (2,311,492) (3,847,248) (2,478,120) (4,105,501) -9.3% -15.0%

CMB Loans, Net 39,730,051 68,983,287 36,737,452 61,145,816 19,594,499 32,462,206 12.8% 112.5%

RB Loans, Gross 330,734,752 574,254,751 294,319,975 489,866,167 218,453,579 361,912,044 17.2% 58.7%

RB Loan Loss Provisions (12,659,853) (21,981,302) (10,535,768) (17,535,733) (7,818,851) (12,953,491) 25.4% 69.7%

RB Loans, Net 318,074,900 552,273,449 283,784,207 472,330,434 210,634,727 348,958,553 16.9% 58.3%

PB Loans, Gross 3,213,349 5,579,338 3,680,477 6,125,786 4,238,739 7,022,319 -8.9% -20.5%

PB Loan Loss Provisions (107,525) (186,695) (141,489) (235,494) (97,881) (162,159) -20.7% 15.1%

PB Loans, Net 3,105,825 5,392,643 3,538,988 5,890,292 4,140,858 6,860,160 -8.4% -21.4%

CC Loans, Gross 158,363 274,965 196,451 326,973 347,980 576,498 -15.9% -52.3%

CC Loan Loss Provisions (65,171) (113,157) (151,191) (251,643) (213,568) (353,818) -55.0% -68.0%

CC Loans, Net 93,192 161,808 45,260 75,330 134,412 222,680 114.8% -27.3%

Provisions For Loan Losses (14,842,122) (25,770,376) (13,139,941) (21,870,117) (10,608,420) (17,574,969) 17.8% 46.6%

Deferred Income On Loans (24,866,545) (43,175,782) (18,662,081) (31,061,167) (8,752,827) (14,500,809) 39.0% 197.7%

Net Loans 336,137,422 583,635,405 305,443,826 508,380,705 225,751,669 374,002,790 14.8% 56.1%

Accrued Interest & Dividends, Net 6,610,907 11,478,518 4,337,849 7,219,916 3,637,220 6,025,783 59.0% 90.5%

Net Investments 176,108 305,776 193,346 321,805 104,235 172,686 -5.0% 77.1%

Net Property Owned 417,329 724,609 479,285 797,722 429,536 711,613 -9.2% 1.8%

Investment Property 2,871,818 4,986,338 2,879,618 4,792,835 2,893,001 4,792,835 4.0% 4.0%

Net Property, Plant & Equipment 74,280,984 128,974,072 76,389,358 127,142,447 76,112,420 126,095,447 1.4% 2.3%

Net Intangible Assets 6,139,051 10,659,235 5,929,650 9,869,309 5,601,729 9,280,385 8.0% 14.9%Net Other Assets 13,071,782 22,696,534 13,678,498 22,766,492 14,981,384 24,819,659 -0.3% -8.6%

Goodwill - - - - - - NMF NMF

Deferred Tax Asset - - - - - - NMF NMF

Total Assets 745,623,803 1,294,626,610 767,596,237 1,277,587,176 506,387,097 838,931,503 1.3% 54.3%

-

Total Deposits 657,077,000 1,140,882,795 677,485,776 1,127,607,326 417,201,119 691,177,094 1.2% 65.1%

Interbank Deposits 1,348,626 2,341,620 919,228 1,529,963 724,508 1,200,293 53.1% 95.1%

Other Deposits - - - - - - NMF NMF

Client Balances & Deposits 655,728,374 1,138,541,175 676,566,548 1,126,077,363 416,476,610 689,976,801 1.1% 65.0%

CMB Client Balances & Deposits 353,246,234 613,341,436 403,289,282 671,234,681 236,618,502 392,005,873 -8.6% 56.5%

Current Accounts 333,065,357 578,301,380 377,304,516 627,985,637 217,510,228 360,349,194 -7.9% 60.5%

Saving Accounts 5,678,832 9,860,156 763,546 1,270,847 370,890 614,453 675.9% 1504.7%

Time Deposits 13,808,029 23,974,880 25,221,220 41,978,198 18,737,385 31,042,225 -42.9% -22.8%

Certificates of Deposit 694,016 1,205,020 - - - - NMF NMF

RB Client Balances & Deposits 266,922,218 463,457,046 239,932,932 399,344,372 148,588,081 246,165,873 16.1% 88.3%

Current Accounts 60,331,294 104,753,226 56,283,514 93,678,280 46,591,639 77,188,369 11.8% 35.7%

Saving Accounts 21,111,042 36,655,102 15,079,229 25,097,869 5,239,530 8,680,330 46.0% 322.3%

Time Deposits 165,094,090 286,652,869 165,304,325 275,132,518 96,756,911 160,297,174 4.2% 78.8%

Certificates of Deposit 20,385,791 35,395,850 3,265,865 5,435,705 - - NMF

PB Client Balances & Deposits 35,559,922 61,742,693 33,344,334 55,498,309 31,270,028 51,805,055 11.3% 19.2%

Current Accounts 6,779,102 11,770,556 3,926,794 6,535,757 2,256,810 3,738,857 80.1% 214.8%

Saving Accounts 1,784,843 3,099,024 1,365,394 2,272,562 785,330 1,301,057 36.4% 138.2%

Time Deposits 23,481,006 40,770,071 27,398,563 45,602,168 28,227,887 46,765,141 -10.6% -12.8%

Certificates of Deposit 3,514,970 6,103,042 653,583 1,087,823 - - 0.0%

Borrowed Funds - - - - 16,096,255 26,666,666 NMF -100.0%

Payable Interest & Dividends 8,948,794 15,537,791 11,126,245 18,518,523 4,072,514 6,746,934 -16.1% 130.3%

Provisions For Issued Guarantees 92,110 159,931 108,520 180,620 113,757 188,462 -11.5% -15.1%

Other Liabilities 13,730,254 23,839,840 14,144,344 23,541,846 9,350,599 15,491,138 1.3% 53.9%

Contingent Capital Participation Note - - - - - - NMF NMF

Total Liabilities 679,848,158 1,180,420,357 702,864,885 1,169,848,315 446,834,245 740,270,294 0.9% 59.5%

Ordinary Shares 30,688,387 53,284,246 32,014,087 53,284,246 32,162,882 53,284,246 0.0% 0.0%

Preferred Shares 2,982,816 5,179,064 2,534,285 4,218,064 538,772 892,584 22.8% 480.2%

Share Premium 24,511,311 42,558,989 25,570,169 42,558,989 25,689,014 42,558,989 0.0% 0.0%

Retained Earnings (4,366,006) (7,580,695) (7,862,946) (13,087,087) (11,371,558) (18,839,259) -42.1% -59.8%

Revaluation Reserve 11,959,137 20,764,650 12,475,757 20,764,650 12,533,742 20,764,650 0.0% 0.0%

Shareholders' Equity 65,775,646 114,206,253 64,731,352 107,738,861 59,552,852 98,661,209 6.0% 15.8%

Total Liabilities and Shareholders' Equity 745,623,804 1,294,626,610 767,596,236 1,277,587,176 506,387,097 838,931,503 1.3% 54.3%

YE 2013

Unaudited

Q3 2013

Unaudited

YE 2012

Audited


of 12

Consolidated Ratios

Quarterly ratios are annualised, where applicable

Profitability Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

ROAA, % 1.65% 1.63% 1.51% 1.06% 0.62% 1.06% 1.11% -1.70%

ROAE, % 19.88% 18.32% 13.17% 11.33% 6.44% 13.29% 21.58% -45.86%

Interest Income/Average Interest Earning Assets, % 19.37% 20.24% 22.34% 21.01% 20.99% 21.58% 25.72% 18.19%

Interest Expense/Interest Income, % 58.21% 63.69% 56.98% 62.04% 56.98% 56.78% 54.12% 82.63%

Cost Of Funds, % 8.98% 9.35% 9.93% 9.62% 9.52% 8.12% 7.37% 6.46%

Cost Of Interest Bearing Liabilities, % 10.45% 10.86% 12.39% 11.10% 12.12% 11.79% 7.64% 10.04%

Net Spread, % 8.92% 9.38% 9.95% 9.91% 8.88% 9.78% 18.08% 8.15%

Net Interest Margin, % 8.09% 7.35% 9.61% 7.98% 9.03% 9.44% 11.89% 3.16%

Net Interest Margin on Average Gross Loans, % 10.25% 9.01% 10.48% 9.43% 9.74% 9.40% 13.59% 3.25%

Net Fee & Commission Income/Total Operating Income, % 21.07% 25.81% 25.22% 23.32% 31.77% 42.80% 51.29% 71.49%

Net Fee & Commission Income/Average Total Assets, % 1.77% 1.97% 2.58% 19.86% 3.48% 4.96% 7.64% 9.21%

Net Non-Interest Income/Total Operating Income,% 29.52% 36.23% 35.01% 32.73% 40.60% 50.95% 62.43% 89.85%

Operating Leverage (Normalised), % 16.50% -9.96% -20.17% -12.21% -7.08% 5.58% 43.62% 18.57%

Recurring Earning Power,% 2.14% 1.45% 1.96% 1.44% 3.06% 3.87% 4.12% 3.97%

Efficiency Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

Total Assets/Employee, GEL 251,628 251,345 184,827 251,628 184,827 181,072 150,232 84,395

Total Operating Income/Employee, GEL 21,845 18,261 18,854 17,515 20,241 18,206 16,228 10,843

Total Recurring Operating Costs/Income Ratio (Normalised),% 81.99% 83.07% 91.13% 84.62% 75.37% 70.78% 73.16% 103.44%

Total Recurring Operating Costs/Average Total Assets (Normalised), % 6.88% 6.32% 9.30% 6.72% 8.25% 8.21% 10.90% 13.33%

Total Operating Income/ Average Total Assets, % 8.39% 7.61% 10.21% 7.94% 10.94% 12.70% 14.95% 12.85%

Total Recurring Cash Costs/Average Total Assets, % 5.98% 5.36% 8.24% 5.71% 7.06% 6.96% 9.38% 11.14%

Net Income (Loss)/Employee, GEL 8,250 3,914 2,795 3,320 1,142 1,713 1,199 (1,432)

Personnel Costs/Average Total Assets, % 3.89% 3.54% 4.97% 3.68% 4.47% 4.30% 5.97% 6.31%

Personnel Costs/Total Recurring Operating Costs,% 61.97% 57.49% 56.94% 56.69% 56.14% 54.10% 54.83% 47.36%

Personnel Costs/Total Operating Income,% 46.36% 46.52% 48.72% 46.39% 40.85% 37.11% 40.12% 48.99%

Net Normalised Operating Income/Total Operating Income, % 25.18% 19.08% 14.43% 18.17% 27.22% 31.40% 28.24% -3.44%

Net Income (Loss)/Total Operating Income,% 37.77% 21.43% 14.82% 18.96% 5.64% 9.15% 7.39% -13.21%

Liquidity Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

Net Loans/Total Assets,% 45.08% 39.79% 44.58% 45.08% 44.58% 43.74% 29.49% 25.14%

Average Net Loans/Average Total Assets,% 41.75% 39.50% 46.46% 40.88% 44.21% 36.67% 28.39% 29.68%

Net Loans/Client Balances & Deposits, % 51.26% 45.15% 54.21% 51.26% 54.21% 54.24% 43.83% 39.76%

Average Net Loans/Average Client Balances & Deposits,% 47.29% 44.96% 60.90% 46.77% 55.07% 47.07% 41.99% 49.41%

Net Loans/Total Deposits,% 51.16% 45.08% 54.11% 51.16% 54.11% 51.73% 39.19% 31.81%

Net Loans/Total Liabilities,% 49.44% 43.46% 50.52% 49.44% 50.52% 48.56% 31.54% 25.88%

Current Account Balances/Client Balances & Deposits,% 61.03% 64.67% 63.96% 61.03% 63.96% 77.15% 67.71% 71.57%

Savings Account Balances/Client Balances & Deposits, % 4.36% 2.54% 1.54% 4.36% 1.54% 1.23% 0.32% 0.00%

Time Deposits/Client Balances & Deposits,% 30.86% 32.21% 34.51% 30.86% 34.51% 21.62% 31.97% 28.43%

Certificates of Deposit/Client Balances % Deposits, % 3.75% 0.58% 0.00% 3.75% 0.00% 0.00% 0.00% 0.00%

Client Balances & Deposits/Total Deposits,% 99.79% 99.86% 99.83% 99.79% 99.83% 95.38% 92.33% 80.00%

Interest Earning Assets/Total Assets, % 72.50% 63.98% 72.24% 72.50% 69.26% 67.06% 50.25% 35.30%

Average Interest Earning Assets/Average Total Assets,% 73.06% 66.07% 72.27% 66.93% 71.98% 66.15% 47.76% 41.40%

Liquid Assets/Total Assets,% 41.03% 46.67% 34.93% 41.03% 34.93% 35.35% 42.00% 35.06%

Liquid Assets/Total Liabilities,% 45.00% 50.97% 39.58% 45.00% 39.58% 39.24% 44.93% 36.52%

Client Balances & Deposits/Total Assets,% 87.94% 88.14% 82.24% 87.94% 82.24% 80.64% 68.41% 63.23%

Total Deposits/Total Assets,% 88.12% 88.26% 82.39% 88.12% 82.39% 84.54% 75.27% 79.04%

Total Deposits/Total Liabilities,% 96.65% 96.39% 93.37% 96.65% 93.37% 93.86% 80.52% 81.38%

Client Balances & Deposits/Shareholders' Equity (Times) 9.97 10.45 6.99 9.97 6.99 8.12 11.12 22.01

Leverage (Total Liabilities/Equity), Times 10.34 10.86 7.50 10.34 7.50 9.08 15.25 33.80

Asset Quality Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

NPLs/Gross Loans,% 5.56% 6.51% 5.27% 5.56% 5.27% 11.66% 18.55% 35.46%

Pre-October 2009 NPLs/Respective Gross Loans 44.69% 67.60% 65.18% 44.69% 65.18% 86.28% 77.08% 64.22%

Post-September 2009 NPLs/Respective Gross Loans 4.55% 5.27% 3.63% 4.55% 3.63% 2.96% 2.46% 0.00%

Loan Loss Reserve/Gross Loans,% 3.95% 4.74% 5.01% 3.95% 5.01% 9.69% 12.67% 22.38%

Average Loan Loss Reserve/Average Gross Loans, % 3.80% 4.75% 5.73% 3.94% 9.15% 9.98% 14.09% 20.23%

NPL Coverage Ratio, % 145.46% 128.77% 155.84% 145.46% 155.84% 110.37% 116.41% 124.30%

Loan Loss Reserve Coverage Ratio 84.04% 77.15% 98.99% 84.04% 98.99% 86.30% 59.84% 60.35%

Cost Of Risk, % -1.17% -1.87% -0.52% -0.30% 3.03% 6.21% 7.01% 14.01%

Cost Of Risk Of Loans Issued Pre-October 2009 -139.04% -207.28% -0.73% -89.26% 8.02% 23.03% 15.24% 16.49%

Cost Of Risk Of Loans Issued Post-September 2009 1.87% 2.56% -0.43% 1.78% 2.61% 3.14% 2.03% 2.20%

Capital Adequacy (BIS) Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

Shareholders' Equity/Total Assets,% 8.82% 8.43% 11.76% 8.82% 11.76% 9.36% 6.15% 2.87%

Average Shareholders' Equity/Average Total Assets,% 8.29% 8.90% 11.49% 9.32% 9.59% 7.99% 7.04% 3.71%

Tier I Capital (GEL) 93,778,514 86,974,212 77,896,560 93,778,514 77,896,560 51,012,356 15,276,432 (13,788,000)

Eligible Tier II Capital (GEL) 30,388,335 29,355,934 27,639,666 30,388,335 27,639,666 27,802,055 15,276,432 -

Less Deductions (GEL) - - - - - - (3,370,631) (346,656)

Total Capital (GEL) 124,166,849 116,330,146 105,536,225 124,166,849 105,536,225 78,814,411 27,182,233 (14,134,656)

Risk-Weighted Assets (GEL) 783,135,030 700,014,811 577,420,546 783,135,030 577,420,546 513,024,707 332,500,470 220,412,267

Risk-Weighted Assets/Total Assets 60.47% 54.79% 68.83% 60.47% 68.83% 69.97% 62.60% 68.66%

Tier I Ratio 11.97% 12.42% 13.49% 11.97% 13.49% 9.94% 4.60% -6.26%

Total Capital Adequacy Ratio 15.86% 16.62% 18.28% 15.86% 18.28% 15.36% 8.20% -6.41%

Capital Adequacy (NBG) Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

Tier I Capital (GEL) 72,691,345 72,520,271 59,974,575 72,691,345 59,974,575 30,533,397 (6,488,209) (18,276,269)

Eligible Tier II Capital (GEL) 48,894,807 28,640,323 17,726,084 48,894,807 17,726,084 19,405,368 - -

Less Deductions (GEL) (1,457,899) (1,457,899) (1,457,899) (1,457,899) (1,457,899) (1,457,899) (1,382,985) (5,569,185)

Total Capital (GEL) 120,128,253 99,702,695 76,242,760 120,128,253 76,242,760 48,480,865 (7,871,194) (23,845,454)

Risk-Weighted Assets (GEL) 888,120,672 774,914,169 620,795,618 888,120,672 620,795,618 557,986,619 362,499,817 241,967,475

Risk-Weighted Assets/Total Assets 66.97% 63.87% 68.48% 66.97% 68.48% 74.44% 68.29% 75.37%

Tier I Ratio 8.18% 9.36% 9.66% 8.18% 9.66% 5.47% -1.79% -7.55%

Total Capital Adequacy Ratio 13.53% 12.87% 12.28% 13.53% 12.28% 8.69% -2.17% -9.85%

Selected Operating Data Q4 2013 Q3 2013 Q4 2012 2013 2012 2011 2010 2009

Full Time Employees (FTEs), Standalone 3,936 3,801 2,982 3,936 2,982 2,935 2,083 1,890

Contractors, Standalone 1,209 1,282 1,557 1,209 1,557 1,524 1,861 1,914

Total Employees, Standalone 5,145 5,083 4,539 5,145 4,539 4,459 3,944 3,804

Assets Per FTE (GEL) 328,919 336,119 281,332 328,919 281,332 275,369 257,102 169,862

Number Of Branches & Service Outlets 498 462 334 498 334 195 192 177

Number of Liberty Express Mobile Branches 105 103 100 105 100 86 12 -

Number Of ATMs 342 336 288 342 288 248 203 136


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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.

liberty bank unaudited ifrs based q4 2013 and 2013 results

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