Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information Glossary Alternative performance measures (APMs) In this Loan yield Banking interest income from loans to customers Annual Report the management uses various APMs, and finance lease receivables divided by monthly average which they believe provide additional useful information gross loans to customers and finance lease receivables; for understanding the financial performance of the Group. These APMs are not defined by International NBG liquidity ratio Daily average liquid assets (as defined Financial Reporting Standards, and also may not be by NBG) during the month divided by daily average directly comparable with other companies who use similar liabilities (as defined by NBG) during the month; measures. Management believes that these APMs provide the best representation of our financial performance NBG (Basel III) Tier I capital adequacy ratio (CAR) as these measures are used by management to evaluate Tier I capital divided by total risk weighted assets, both our operating performance and make day-to-day calculated in accordance with the requirements of the operating decisions; National Bank of Georgia instructions; Basic earnings per share (EPS) Profit for the period from NBG (Basel III) Total capital adequacy ratio (CAR) Total operations attributable to shareholders of the Group regulatory capital divided by total risk weighted assets, divided by the weighted average number of outstanding both calculated in accordance with the requirements of ordinary shares over the same period; the National Bank of Georgia instructions; Book value per share Total equityattributable to Net interest margin (NIM) Net banking interest income shareholders of the Group divided by ordinary shares of the period divided by monthly average interest earning outstanding at period end; net ordinary shares outstanding assets excluding cash for the same period; equals total number of ordinary shares outstanding at period end less number of treasury shares at period end; Net loans In all sections of the Annual Report, except for the consolidated audited financial statements, net Constant currency basis Changes assuming constant loans are defined as gross loans to customers and finance exchange rate; lease receivables less allowance for expected credit loss/impairment loss; Cost of funds Banking interest expense of the period divided by monthly average interest bearing liabilities; Non-performing loans (NPLs) The principal and interest on loans overdue for more than 90 days and any additional Cost of risk Expected loss/impairment charge for loans potential losses estimated by management; to customers and finance lease receivables for the period divided by monthly average gross loans to customers NPL coverage ratio allowance for expected credit loss/ and finance lease receivables over the same period; impairment loss of loans and finance lease receivables divided by NPLs; Cost to income ratio Operating expenses divided by revenue; NPL coverage ratio (adjusted for discounted value of Demerger The Group combined a Banking Business and collateral) Allowance for expected credit loss/impairment an Investment Business prior to the Group Demerger on loss of loans and finance lease receivables divided by NPLs 29 May 2018, which resulted in the Investment Business’s (discounted value of collateral is added back to allowance separation from the Group effective from 29 May 2018 for expected credit loss/impairment loss); (the “Demerger”); Operating leverage Percentage change in revenue less Gross loans to customers throughout this report are percentage change in operating expenses; presented net of ECL on contractually accrued interest income; Return on average total assets (ROAA) Banking Business profit for the period divided by monthly average total Interest bearing liabilities Amounts due to credit assets for the same period; institutions, client deposits and notes, and debt securities issued; Return on average total equity (ROAE) Banking Business profit for the period attributable to shareholders of Interest earning assets (excluding cash) Amounts due BOGG divided by monthly average equity attributable to from credit institutions, investment securities (but shareholders of BOGG for the same period; excluding corporate shares) and net loans to customers and finance lease receivables; Weighted average number of ordinary shares Average of daily outstanding number of shares less daily outstanding Leverage (times) Total liabilities divided by total equity; number of treasury shares; Liquid assets Cash and cash equivalents, amounts due Weighted average diluted number of ordinary shares from credit institutions and investment securities; weighted average number of ordinary shares plus weighted average dilutive number of shares known to Liquidity coverage ratio (LCR) High quality liquid assets management during the same period. (as defined by NBG) divided by net cash outflow over the next 30 days (as defined by NBG); Annual Report 2018Bank of Georgia Group PLC 287