Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information With regard to the Board, we invited two new Of course, challenges remain. Although poverty is receding, independent members to join us in 2018 – Véronique the gap between rich and poor increases. Growing McCarroll and Andreas Wolf. You can find their biographies inequality often has political implications in democracies on page 114. They are both heavily involved in the digital and needs to be addressed by both the Government financial world – a clear priority for us. Véronique is and the banking sector. Director of Digital Strategy with the French telecom operator Orange, and Andreas is leading the scale-up On the political front, 2018 saw the election of a new of the banking subsidiary of Raisin, a leading European President – Salome Zurabishvili – the first female FinTech company. Both also bring significant banking President of Georgia. Although the presidency is a experience, Véronique in risk management and Andreas largely symbolic role, the election was hotly contested in lean and digital transformation. Véronique is also our and Zurabishvili won in the end, but only after a vigorous second female Board member – the number that we had campaign. On the positive side, one notes that Georgia promised to reach and which we would like to exceed enjoys a free press and lively democratic debates. On in the future. the negative side, indications of dissatisfaction from a large part of the electorate bodes for highly contested Our Board stands today at eight non-executive members parliamentary elections in 2020. We must not forget – a good number to conduct vigorous strategic and that Georgia has already seen a peaceful change of operational discussions. The Board members have government in 2012 and has already demonstrated an a wide range of experiences and backgrounds that ability to change governing parties without a break-up facilitate rich debate, as each member contributes his in the political process. Fortunately for economic growth, or her knowledge from their own area of competence the pro-business policies of both parties and their view and expertise. This diversity supports the ethos of strong of foreign policy, remain remarkably similar. It is that corporate governance that is an essential part of the consistency and stability that have underpinned the Board’s mandate. We encourage critical opinions, which growth of the economy over the last decade. we feel are an essential part of good governance and too easily overlooked when things are going well. We are able Georgia continues to aspire to join the European Union to reach consensus on major decisions after weighing the and NATO. In both cases, the process is more important contributions from all members. My role as a Chairman than the destination. However, an overwhelming of the Board is to set an agenda, foster discussions, frame percentage of the population supports the move towards the issues, and encourage a search for optimal solutions. integration with Europe and this is also supported by the European Union and the United States. It is a delicate As I did when I was Chair of BGEO Group, I will say a word balance that Georgia has played well thus far. Russian on the economy and Georgia’s political environment. tourists can come to Georgia visa-free and their numbers continue to increase every year (up 23.8% in 2018). Economically, Georgia has continued its decade-long track Moreover, Russian businesses can operate in Georgia as record of strong economic performance, with a 4.7% real freely as any other. Georgia enjoys low corruption levels, GDP growth in 2018 with similar expectations for the free press, economic growth and democracy and often next few years. This performance evidences that Georgia ranks as high in all aspects as major Europeans countries. has a resilient economy capable of weathering conflicts Georgia’s continued progress on the path of democracy in neighbouring countries, volatility in commodity prices, and economic growth represents a very attractive risk and general global crises. This resilience is undoubtedly to reward opportunity for investors. Moreover, Bank of due to the economic reforms that successive governments Georgia, with the strength of its balance sheet, focus have put in place in order to create a business-friendly on RAOE, commitment to Georgia and long track record environment. Moreover, the present government has of strong governance, is an ideal investment vehicle. worked hard to promote good and competent governance in the country. Additionally, the National Bank of Georgia strives to enhance corporate governance and reduce Neil Janin systemic risks in the sector. In the case of our Group, these Chairman efforts took the form of support and encouragement 27 March 2019 when we announced our decision to clearly separate the Banking and Investment Businesses of the BGEO Group – a move that made sense for us and for Georgia. On the foreign policy front, the Deep and Comprehensive Free Trade Agreement (DCFTA) signed with the European Union and the Free Trade Agreement with China are already contributing to economic growth. Georgia is working year after year to stand out in the region with political stability and economic performance and become a regional hub in terms of trade, transport, logistics and tourism. The IMF, the EBRD and other development finance institutions have positively spoken about Georgia and consider the country to be a bright star in this part of the world. Annual Report 2018Bank of Georgia Group PLC 11