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First Half 2007 Results

  • Group Profitability rises by 31% to €417m.
  • Acceleration of New Europe Loan Growth by 109%  and Group Loans by 33%
  • Strengthening the Network outside Greece, now reaching 900 Branches, Points of Sale & Business Centres
  • Announcement of new, upgraded financial targets 

The Eurobank EFG Group continued to demonstrate strong business growth in the first six months of 2007. Consolidated net profit increased by 31% y-o-y and reached €416.7m. Net profit stemming from international activities of the whole Group stood at €21.7m., whereas net profit from the operations in Bulgaria, Romania, Serbia and Turkey quadrupled and amounted to €42m., from €9.7m. a year ago. The expansion of the loan portfolio in New Europe was also substantial in the first six months of the current year, with total loans climbing by 109% on a comparable basis  to €6.2bn. At the end of the first half 2007, the network of Eurobank EFG in Greece and abroad reached 1400 branches, points of sale and business centres, of which 900 were in New Europe. 

This robust performance reinforces the strategy of the Group to enhance further its footprint in countries of New Europe where it is already present, and expand in other countries which demonstrate significant growth prospects. Organic growth and selective acquisitions that will create shareholder value are expected to be the drivers of further expansion. 

The acceleration of business growth mainly outside of Greece and the prospect of future acquisitions in New Europe and the Eastern Mediterranean region led the Management of Eurobank EFG to propose a share capital increase of €1.2bn to the General Meeting of Shareholders, which will take place on August 2nd. The Board of Directors will convene tomorrow to decide on the terms of the share capital increase.

Under these circumstances, the financial targets of profitability and efficiency that had been announced in February 2007 are revised upwards and extended until 2010. More specifically, the new targets are as follows:

Group Net Profit at least €820m. in 2007 and €1,550m. in 2010
  • New Europe Net Income at least €60m. in 2007 and €550m. in 2010 (contributing more than 35% to Group profits)
  • Cost to Income Ratio for the Group below 45% in 2010
  • Group ROE above 25% in 2010


     Summary Figures

         1H 2007     

         1H 2006     

              Δ %           

     Total Assets (€ bn)




     Gross Loans (€ bn)




     Total Deposits (€ bn)




     Total Revenues (€ m.)




     Net Profit (€ m.)




     ROA (after tax)




     ROE (after tax & minorities)                           




     Cost to Income




    Total Assets advanced by 28.3% y-o-y and stood at €61.3bn at the end of June 2007, mainly due to accelerated credit growth. Group Total Loans expanded by 33.1% y-o-y and amounted to €40.5bn, with Total Loans rising by 22% in Greece and 109%  in New Europe. On a quarterly basis, net loan additions in Greece and New Europe reached record levels and stood at €1.9bn and €1.3bn respectively. In the same quarter of 2006, net loan additions were €1.3bn in Greece and €428m. in New Europe.

    Corporate lending recorded vigorous growth, with outstanding balances increasing substantially by 36.5% to €21.7bn. Household lending continued expanding at a fast pace in Greece and in New Europe, with Loans to households (consumer credit and mortgages) advancing by 29.4% to €18.9bn at the end of the first half of 2007.    

    The efficient management of credit risk led to further improvement in the quality of the loan book. At the end of June 2007, the total NPL ratio decreased to 2.57%, which is the best credit quality ever for Eurobank EFG. Provisions represented 1% of avg. net loans and covered 92.4% of non-performing loans. The NPL coverage ratio is among the highest in the Greek banking sector and exceeds the 90% limit set by the Bank of Greece. 

    Along with the robust loan expansion, Wealth Management activities recorded solid growth in the first six months of the current year. Group Customer Funds under Management (FUM) rose by 23.7% y-o-y, reaching €48.9bn at the end of June 2007. FUM in New Europe grew also notably to €5.4bn, from €3.3bn a year ago. Group Total Deposits (excluding repos) expanded by 26.5% y-o-y and amounted to €26.8bn the first six months of 2007. Private Banking and Life Insurance FUM advanced as well by 16.3% to €7.9bn and 23% to €1.1bn, respectively.  
    As a result of robust loan growth in Greece and New Europe, Net Interest Income (NII) increased by 22.3% and totaled €926.8m. in the six months of 2007. In the second quarter of the current year, NII reached €482m. and was 8.5% up on the previous quarter. NII generated by our operations in New Europe surged by 91% to €177.5m., contributing 19.2% to the Group net interest income. At the same time, the net interest margin (net interest income over avg. total assets) remained above 3.2%.

    Fees and Commissions also grew substantially by 20.6% and stood at €301.5m. in the first half of 2007. Fees from banking activities were up by 20.2%, reaching €264.5m., due to the strong lending volume growth, robust business at the branches and operations related to the capital markets. As a result of the dominant position of Eurobank EFG in the capital markets and the shiny conditions prevailing, fees from brokerage, investment banking and treasury activities grew by 15% and amounted to €71.3m., from €62m the first half of 2006. The contribution of New Europe fees and commissions to Group fees was substantial, as these stood at €66m., recording a y-o-y increase of 76.4%.

    The effective management of Treasury positions combined with the favourable capital market conditions contributed to the robust increase of 57% in Trading Gains from Bonds, Equities and FX to €89.1m. the first half of 2007, versus €56.8m. the respective period of 2006. Overall, trading gains together with dividend income and other operating income totaled €110.4m., recording a y-o-y rise of 31.7%.  

    Group Total Revenues increased by 22.6% to €1.3bn at the end of the first six months of 2007, from €1.1bn the respective period of 2006. Fast business expansion in New Europe led revenues from this region to increase substantially by 85% to €258.4m. The contribution of NE revenues to Group total revenues rose to 19.3% in the first half of 2007, from 12.8% a year ago.

    Total Operating Expenses were up 11.1% in Greece and 26.1% at a Group level, whereas on a like-for-like basis (excluding acquired banks), Group costs increased by 16.7%. Cost growth was affected by the opening of 115 new branches, business centers and points of sale and investments to strengthen the Group’s presence in New Europe. Nevertheless, the Cost-to-Income ratio for the Group was 47.4%, whereas for the Greek operations it decreased further to 39% at the end of June 2007. 

    The strengthening of Group profitability led to a Return on average Assets (after tax) of 1.47% and to a Return on average Equity (after tax and minorities) of 28.0% in the first half of the current year. At 31 June 2007, the Total BIS Ratio under Basle II regulations stood at 10.6% and the Core Tier I Ratio reached 6.9%. 

    The strengthening of the Group’s presence and profitability in New Europe continues at a fast pace. In just 6 months, 115 new branches, business centers and points of sale were set up, bringing the total network outside Greece to 900 units. The network expansion along with the simultaneous strengthening of the centralised and back office operations and the establishment of specialised subsidiary companies contributed to the robust growth of volumes and profitability and to better client service. As already mentioned, net profit from New Europe stood at €21.7m. at the end of the first half 2007, against losses a year ago, whereas excluding the most recent operations in Poland and Ukraine net profit surged to €42m., from €9.7m. in the first six months of 2006. As a result of the acceleration of growth in the second quarter of this year, profits of this period doubled from the first quarter and amounted to €14.7m. 

    In Bulgaria, the operational merger of Postbank with DZI Bank was completed in less than six months. This important development resulted in the creation of one of the largest networks in the country, with 278 branches and points of sale. In recognition of the robust business growth and the quality of its services, Postbank was awarded with the “Bank of the Year” 2006 prize by Paris Daily. At the same time, the Eurobank EFG Group has enhanced its presence in the country through the establishment of specialised subsidiary companies which offer Leasing, Factoring and Property services to Postbank and DZI Bank clients.

    In Romania, BancPost expanded its network to 242 branches and points of sale and delivered accelerated business growth in loans to corporate and households. The loan portfolio more than doubled at the end of June 2007, with second quarter 2007 balances being 28% up on the first quarter of the current year. The services of the bank in Romania are enhanced through a number of subsidiary companies of Eurobank EFG in the fields of Equity Brokerage, Investment Banking, Leasing, Property Services and Mutual Funds Management.

    In Serbia, the legal merger of Eurobank EFG with NSB was completed. The new, unified bank, which was renamed Eurobank EFG štedionica a.d. Beograd., enjoys a network of 102 branches and points of sale and offers  high quality services to companies and individuals. During the first half of the current year, the agreement to buy 74.16% of Prospera Securities was concluded. The brokerage firm currently holds a 6.3% market share.  
    In Poland, the growth of the network continued at a rapid pace, reaching 200 branches and points of sale at the end of June 2007. Loan balances stood at €742m., from €231m. at the end of 2006 and just €19m. a year ago, with Polbank EFG loans to households corresponding to 1% of total household loans in the Polish market. The net increase of Polbank EFG retail loan balances (consumer loans, mortgages and SBLs) in the second quarter of 2007 accounts for 6% market share in the total growth of retail loan balances in Poland in the same quarter.

    In Turkey, the Group commenced its corporate banking business through Tekfenbank, following the acquisition of a 70% stake at the end of the first quarter of 2007. At the same time, 3 new branches were created and new teams reinforced the Large Corporate, Treasury and Affluent Banking Divisions. Furthermore, Factoring operations were established. In equity capital markets, EFG Istanbul Securities continued its robust performance, increasing its market share in overall transactions to 3.5%, from 2.5% last year.   

    In Ukraine, the new operational system was successfully deployed, and the network reached 45 branches, following the creation of 11 new units, 3 months after the acquisition of the bank by Eurobank EFG.      


     Summary Figures (€ m.)

        1H 2007   

        1H 2006    

         Δ %     

        Νew Europe     

     Net Interest Income





     Net fees & Commissions





     Non banking fees





     Total Operating Income





     Operating Expenses





     Impairment losses on loans



     8,6 %


     Profit before tax after minorities              





     Net Profit





     Gross Loans










     Total Assets





     Ordinary Shareholders' Equity






    Portfolio of Loans (Gross, € m)                      

        1Η 2007   

         1Η 2006    

        Δ %     

     Consumer Loans








     Loans to Households




     Small Business Loans




     Loans to Medium enterprises




     Loans to Large Corporates




     Business Loans




     Total Gross Loans





    Assets Under Management (€ m)                  

        1Η 2007    

         1Η 2006     

         Δ %     

     Deposits & Other liquid funds




     Mutual Funds




     Other investment products




     Total Funds under Management





    Financial Ratios

         1H 2007   

          1H 2006    

     Net Interest Margin






     NPLs (% of loans)



     NPLs coverage



     Provision Charge (% of loans)                  



     Tier I (*)



     Total Capital Adequacy  (*)



     ROA after tax



     ROE after tax and minorities



     EPS annualized (€)



    (*) 1H 2007 Capital Ratios under Basle II regulations.