Overview of financial results continued •Significant growth in loans issued and deposits opened through Internet and Mobile Bank. In 2017, we started actively offering loans and deposit products to our customers through the Internet Bank. During 2018, 27,557 loans were issued with a total value of GEL 55.5 million, and 10,643 deposits were opened with a total value of GEL 33.0 million through internet bank (5,798 loans with total value of GEL 15.1 million and 7,458 deposits with total value of GEL 19.1 million in 2017). Starting from 2018, our customers are able to apply for a loan via mBank as well. 26,098 loans were issued with a total value of GEL 39.4 million using the mobile banking application during 2018. Moreover, in 3Q18 a new feature was added to mBank and our customers can now open a deposit via our mobile platform. During the fourth quarter of 2018, 5,124 (up to 2,900 in 3Q18) deposit accounts were opened with a total deposited amount of GEL 3.1 million (GEL 5.7 million in 3Q18). As a result, the c.78% of total daily banking transactions were executed through digital channels during 2018. •SOLO, our premium banking brand, continues its stronggrowth momentum and investment in its lifestyle offering. We have now 12 SOLO lounges, of which nine are located in Tbilisi, the capital of Georgia, and three in major regional cities of Georgia. We achieved our target of 40,000 SOLO clients by the end of 2018 ahead of time in 3Q18. The number of SOLO clients reached 44,292 at 31 December 2018 (32,104 at 31 December 2017), up 434.8% since its re-launch in April 2015. Going forward, SOLO will be targeting growth through increasing our engagement with existing clients and maximising profit per client and product per client measures. In 2018, the product to client ratio for the SOLO segment was 5.4, compared to 2.1 for our retail franchise. While SOLO clients currently represent 1.8% of our total retail client base, they contributed 28.4% to our retail loan book, 39.0% to our retail deposits, 14.5% and 21.5% to our net retail interest income and to our net retail fee and commission income in 2018, respectively. The fee and commission income from the SOLO segment reached GEL 21.2 million in 2018 (GEL 14.4 million in 2017). SOLO Club, launched in 2Q17, a membership group within SOLO which offers exclusive access to SOLO products and deals ahead of other SOLO clients at a higher fee, continued to increase its client base. At 31 December 2018, SOLO Club had 3,825 members (1,882 member at 31 December 2017). • MSME banking delivered strong growth. The number of MSME segment clients reached 195,230 at 31 December 2018, up 17.8% y-o-y. MSME’s gross loan portfolio reached GEL 2,176.2 million at 31 December 2018 (up 25.1% y-o-y). The MSME segment generated revenue of GEL 165.5 million in 2018 (up 32.1% y-o-y). •In 4Q18, the Bank introduced a new payment method, QR PAY to the local small business market. QR PAY has been designed by the Bank as an alternative payment mechanism to the traditional point of sale terminal for small Georgian businesses that previously relied on cash transactions as a means for their customers to settle payments. In order to connect to QR PAY and enjoy the benefits of cashless payments, small businesses need to have an account with Bank of Georgia. Once connected, they start receiving QR PAY services free of charge for the first year. Thereafter, a service commission is charged based on the turnover of the enterprise. This is a significant advantage for small businesses with low turnover. For customers who use Bank of Georgia’s mobile bank and a debit or credit card, settling payments with QR PAY is simple, safe and user-friendly. Currently, around 800 small businesses are connected to QR PAY. With QR PAY the Bank has now taken a step further in making digital transactions even more widespread among both our retail and business clients. •As a result, Retail Banking profit before non-recurring items and income tax was GEL 329.7 million during 2018 (up 22.1% y-o-y). Retail Banking continued to deliver an outstanding ROAE of 30.0% in 2018 (31.6% in 20110 7) 10 2018 ROAE adjusted for Demerger-related expenses and one-off impact of remeasurement of deferred tax balances. 98 Annual Report 2018Bank of Georgia Group PLC