Overview of financial results continued Discussion of results The Group’s business is primarily comprised of three segments: (1) Retail Banking operations in Georgia principally provide consumer loans, mortgage loans, overdrafts, credit cards and other credit facilities, funds transfer and settlement services, and handling customers’ deposits for both individuals as well as legal entities. Retail Banking targets the emerging retail, mass retail and mass affluent segments, together with small and medium enterprises and micro businesses. (2) Corporate Investment Banking comprises Corporate Banking and Investment Management operations in Georgia. Corporate Banking principally provides loans and other credit facilities, funds transfers and settlement services, trade finance services, documentary operations support and handles saving and term deposits for corporate and institutional customers. The Investment Management business principally provides private banking services to high net worth clients. (3) BNB, comprising JSC Belarusky Narodny Bank, principally provides retail and corporate banking services to clients in Belarus. Revenue Change GEL thousands, unless otherwise noted 2018 2017 y-o-y Interest income 1,327,085 1,140,292 16.4% Interest expense (587,481) (468,192) 25.5% Net interest income 73904,6 672,100 10.0% Fee and commission income 229,670 192,499 19.3% Fee and commission expense (76,488) (61,025) 25.3% Net fee and commission income 153,182 131,474 16.5% Net foreign currency gain 129,437 86,060 50.4% Net other income 7,815 19,701 -60.3% Revenue 1,030,038 909,335 13.3% Net interest margin 6.5% 7.3% Average interest earning assets 11,312,217 9,234,600 22.5% Average interest bearing liabilities 11,814,475 9,922,415 19.1% Average net loans and finance lease receivables, currency blended 8,331,809 6,856,802 21.5% Average net loans and finance lease receivables, GEL 3,336,575 2,414,121 38.2% Average net loans and finance lease receivables, FC 4,995,234 4,442,681 12.4% Average client deposits and notes, currency blended 7,441,616 6,146,052 21.1% Average client deposits and notes, GEL 2,557,565 1,706,726 49.9% Average client deposits and notes, FC 4,884,051 4,439,326 10.0% Average liquid assets, currency blended 4,395,537 3,854,019 14.1% Average liquid assets, GEL 1,971,407 1,527,420 29.1% Average liquid assets, FC 2,424,130 2,326,599 4.2% Liquid assets yield, currency blended 3.8% 3.4% Liquid assets yield, GEL 6.9% 7.1% Liquid assetsyield, FC 1.2% 0.9% Loan yield, currency blended 13.5% 14.2% Loan yield, GEL 20.4% 21.9% Loan yield, FC 8.8% 10.0% Cost of funds, currency blended 5.0% 4.7% Cost of funds, GEL 7.2% 6.9% Cost of funds, FC 3.6% 3.7% Cost to income ratio 36.7% 37.7% 90 Annual Report 2018Bank of Georgia Group PLC