Overview of financial results continued 2018 2017 Ratios ROAE, Corporate Investment Banking11 22.6% 17.6% Net interest margin, currency blended 3.3% 3.4% Cost of credit risk 0.8% 1.5% Cost of funds, currency blended 4.6% 4.6% Loan yield, currency blended 10.2% 10.7% Loan yield, GEL 13.1% 12.8% Loan yield, FC 9.6% 10.3% Cost of deposits, currency blended 4.1% 4.0% Cost of deposits, GEL 6.4% 6.6% Cost of deposits, FC 2.4% 2.7% Cost of time deposits, currency blended 6.1% 5.8% Cost of time deposits, GEL 7.9% 8.4% Cost of time deposits, FC 4.5% 5.0% Current accounts and demand deposits, currency blended 2.6% 2.8% Current accounts and demand deposits, GEL 5.2% 5.9% Current accounts and demand deposits, FC 0.9% 1.0% Cost to income ratio 30.9% 32.0% Concentration of top ten clients 9.8% 10.7% Performance highlights •CIB resumed growth in 2018 after delivering on the targets of loan portfolio risk de-concentration initiatives in 2017. Net loan book reached GEL 2,618.5 million at 31 December 2018, up 15.9% (up 12.9% on a constant currency basis). The concentration of the top ten CIB clients stood at 9.8% at 31 December 2018 (10.7% at 31 December 2017). •CIB’s net interest income increased by 6.1% are during 208.1CIB NIM was down 10bps y-o-y to 3.3% in 2018, primarily due to lower currency blended loan yields (down 50bps y-o-y). The loan yields mainly decreased onthe back of foreign currency yields (down 70bps y-o-y)), largely reflecting higher activity in EUR-denominated loan origination during the second half of 2018 and higher loan related prepayment fees in 2017. Local currencyloan yields on the other hand went up by 30bps y-o-y). •CIB’s net fee and commission income reached GEL 26.7 million in 2018, up 17.4% y-o-y. The y-o-y increase in net fee and commission income was largely driven by higher placement and advisory fees during 2018. CIB’s net fee and commission income represented 10.5% of total CIB revenue in 2018 as compared to 9.5%in 2017. •CIB’s loan book and de-dollarisation. Foreign currencydenominated loans represented 82.3% of CIB’s loan portfolio as at 31 December 2018, compared to 83.1% at 31 December 2017. Total CIB loan portfolio amounted to GEL 2,618.5 million, up 15.9% y-o-y. On a constant currency basis, CIB loan book was up 12.9% y-o-y. •In 2018,dollarisation of our CIB deposits decreased to 61.2% as at 31 December 2018 from 63.1% a year ago. Year-on-year growth in GEL-denominated deposits was in line with the decreasing trend in the interest rates on foreign currency deposits (down 30bps y-o-y). Despite the decline in interest rates on local currency deposits, thecost ofdeposits in local currency still remained well above the cost of foreign currency deposits. •Net other income.Significant decline in net other income y-o-y in 2018 was largely driven by net losses from derivativefinancial instruments (interest rate swap hedges) and investment securities recorded during 4Q18. •Cost of credit risk.CIB’s cost of credit risk ratio improved significantly and stood at 0.8% in 2018 (down 70bps y-o-y), primarily driven by the improved quality of the CIB loan portfolio and the recovery of several mid to small-sized corporate loans in 4Q18. At the same time, CIB’s NPL coverage ratio improved to 90.3% at 31 December 2018, up from83.1% at 31 December 2017. •As a result,Corporate Investment Banking profit before non-recurring items and income tax was GEL 149.6 million during 2018 (up 29.7% y-o-y). CIB ROAE reached 22.6% in 2018 (compared to 17.6% in 2017).11 112018 ROAE adjusted for Demerger-related expenses and one-off impact of remeasurement of deferred tax balances. 100 Annual Report 2018Bank of Georgia Group PLC