Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information Performance highlights of Wealth Management operations •The Investment Management’s AUM increased to GEL 2,271.5 million as at 31 December 2018, up 22.3% y-o-y. This includes a) deposits of Wealth Management franchise clients, b) assets held at Bank of Georgia Custody, c) Galt & Taggart brokerage client assets, and d) Global certificates of deposit held by Wealth Management clients. The y-o-y increase in AUM mostly reflected increase in client assets and bond issuance activity at Galt & Taggart. •Wealth Management deposits reached GEL 1,268.1 million as of 31 December 2018, up 14.1% y-o-y, growing at a compound annual growth rate (CAGR) of 13.3% over the last five years. The cost of deposits stood at 3.3% in 2018, down 50bps y-o-y in 2018. •We served 1,528 Wealth Management clients from 76 countries as of 31 December 2018, compared to 1,434 clients as at 31 December 2017. •In January 2019, Bank of Georgia opened a brand new office in the centre of Tbilisi, dedicated to serving its Wealth Management clients. The office resides in a historic 19 century building, which originally housed the First Creditth Society of Georgia and is considered to be the first residence of a local banking institution. The design was derived from the integration of Georgian culture with Western values, while the artistic expression of the building has been left intact. The new office coincides with the creation of a new brand identity for the Bank’s Wealth Management business and is in line with its strategy to become the regional hub for private banking. •Galt & Taggart, which brings under one brand corporate advisory, debt and equity capital markets research and brokerage services, continues to develop local capital markets in Georgia. During 2018 Galt & Taggart acted as a: - co-manager of Georgia Capital’s inaugural US$ 300 million international bond issuance due in 2024, in March 2018; - lead manager for Black Sea Trade and Development Bank, facilitating a public placement of GEL 75 million local bonds in March and June 2018; - lead manager of Georgian Leasing Company’s US$ 5 million local public bond issuance due in 2021, in June 2018; - lead manager for Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), facilitating a public placement of GEL 160 million local bonds in July 2018; - rating advisor for JSC Microfinance Organisation Swiss Capital, facilitating the process of obtaining the Long-Term Issuer Default Rating of ‘B-’ from Fitch Ratings, in July 2018; - rating advisor for Georgian Leasing Company, facilitating the process of obtaining the Long-Term Issuer Default Rating of ‘B+’ from Fitch Ratings, in November 2018; and - lead manager of m Commercial Assets’ US$ 30 million local public bond issuance due in 2021, in December 2018.2 •During 2018 Galt & Taggart renewed the agreement to manage the private pension fund of a large Georgian corporate client mandated a year ago through a competitive tender process. •On 31 ay 208, Cbonds, one of the leadges agencies for financial data analyss ad processing, named Galt & TaggartBest Investment Bank in Georgia 2018for the third consecutive year. In 2019, Global Finance Magazine named Galt & Taggart Best Investment Bank in Georgia for the fifth consecutive year. Annual Report 2018Bank of Georgia Group PLC 101