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Press Release First Half 2003 Results

Athens, August 7, 2003



(According to International Accounting Standards)

Operating Income up 16.5% to € 565 million

Cost to Income ratio at 59.3%

Return on Equity at 13.4%

Net profit up 11.5% to € 129 million

EFG Eurobank Ergasias announces consolidated financial results for the first half of 2003 under International Accounting Standards (IAS) and Greek Accounting Standards (GAS). 1H 2003 accounts include Romanian Banc Post (fully consolidated since November 2002), Bulgarian Post Bank (accounted for using the equity method since September 2002) and Serbian Postbanka (fully consolidated as of April 2003).

In the first half of 2003, Group Total Operating Income increased 16.5% to € 565 million, mainly on the back of robust loan growth (21.8%) and a recovery in equity markets related operations. EFG Eurobank Ergasias’ achieved further progress during the second quarter of this year, after having defended its profitability in the difficult market conditions of year 2002 and the first quarter of 2003. This, in addition to improved efficiency, allowed first half 2003 profits to rise 11.5% y.o.y. and second quarter 2003 profits to increase by 33% over the respective quarter of 2002. As a result, Consolidated net profit after tax attributable to shareholders reached € 129 million, compared to € 116 million in the respective period of 2002. Consolidated profit before tax (after minorities) amounted to € 177 million, against € 161 million in the first half of the previous year.

Net Profit


Total Assetsadvanced18% amounting to € 25.7 billion in the first half of 2003, compared to € 21.8 billion a year ago, as the dynamic growth in business volumes continues and the Group’s position in the Greek and foreign markets is further expanding. More specifically:

  • Loan growth accelerated in the second quarter, as the Group increased its loan balances by € 936 million. This led to a significant increase in Customer Loans to € 14.5 billion at the end of June 2003, up 21.8% year on year. Of these, Household Lending, comprising mortgage and consumer credit, expanded by 30% y.o.y. to € 5.7 billion, while Business Lending, including loans to small and medium sized enterprises and large corporates, increased 17% to € 9.3 billion. More specifically, Consumer Credit rose 32% to € 3.1 billion and Mortgage Credit expanded by 27%, reaching € 2.5 billion. The continuous rapid growth of Household Lending has raised its contribution to the total loan portfolio to 37.9%, from 35.6% at the end of June 2002. At the same time, the quality of the loan portfolio remains very good, with organic non-performing loans (NPLs) below 3% of the total loan book. The coverage ratio of 85% is one of the highest in the Greek banking sector. 

  • Customer Deposits recorded a 6% increase y.o.y and amounted to € 17.3 billion. Deposits excluding repos rose by 37%, reaching € 15.6 billion.  Total Customer Funds, including customer deposits, repos, mutual funds and other investment products, increased 7% exceeding  € 24 billion at current prices.

    In spite of the payment of FY 2002 dividend of € 145 million in 2Q 2003, Shareholders’ Equity stands at € 2 billion at the end of 1H 2003, and is among the strongest in the sector. This figure includes all the necessary adjustments on valuations of the various portfolios, as well as liabilities to third parties according to International Accounting Standards. The Capital Adequacy Ratio, which stands at 11.8% and comprises almost solely Tier 1 capital, ensures the ability of EFG Eurobank Ergasias to maintain strong growth rates and an attractive dividend policy for its shareholders.


    Net Interest Income expanded by 17% to € 407 million, from € 349 million in 1H 2002, mainly driven by the substantial growth of the loan portfolio and the corresponding increase in loan interest income. In the second quarter of the year, net interest income amounted to € 206 million and was 3% higher relative to the first quarter. Overall, net interest income accounted for 72% of total operating income. In addition, the net interest margin (net interest income over avg. total assets) was sustained above 3%, signifying the strong position of the Group in the market’s most profitable segments.

    Net Fee and Commission Income was also strong, rising by 16% to € 137 million, compared to € 118 million in 1H 2002. In the second quarter, net fees and commissions totalled € 71 million, up 25% over the same quarter of 2002 and 9% compared to 1Q 2003. Fees and commissions from network activities and other services (including among others platform fees, internet services, property management and insurance) rose substantially by 42% to € 43 million, while fee income from lending activities grew 8% to € 59 million. Fee and commission income from mutual funds and assets under management increased by 8% as well, reaching € 17 million in the first half of 2003. Fees from capital markets operations advanced 2% over 1H 2002 and 45% over 1Q 2003 to € 18 million, aided by the partial recovery in domestic and foreign equity markets.    

    This led to a 16% increase in the Group’ s Core Income, comprising net interest income and net fee and commission income, to € 544 million. It is worth noting that the second quarter’s Core Income of € 278 million is € 40 million higher than that of the same quarter of 2002. Of these, in the second quarter of 2003, € 17 million come from Balkan subsidiaries.  

    As far as non- core Income is concerned, the aggregate result of Dividend Income, Net trading income, Gains less Losses from other Securities and Other Operating Income amounted to € 21 million, compared to € 18 million in 1H 2002, up 19%.

    Therefore, Total Operating Income advanced 16.5% to € 565 million. Total Operating Income in 2Q 2003 stood at € 297 million and was 11% higher than in 1Q 2003.  

    Operating Expenses before depreciation, comprising personnel and administrative expenses, recorded a notable slowdown on a comparable basis, expanding 3.5% to € 263 million, against a growth rate of 4.5% at the end of 2002. Administrative expenses were well contained, falling by 0.8% to € 93 million. Taking into account depreciation, which amounted to € 41 million, total operating expenses in 1H 2003 reached € 304 million, up 6% over 1H 2002.

    As a result of cost containment and the strong rise in revenues, the Group’ s cost-to-income ratio in Greece improved from 59.5% at the end of the first quarter to 57.4% at the end of the first half, while including the Balkan subsidiaries the cost-to-income ratio improved from 61.1% in the first quarter to 59.3% in the first half of 2003.

    Bad debt provisions, which stood at € 33 million in the second quarter of 2003 and account for 92 bps of the Bank’s average loan portfolio, were also close to the levels of the preceding quarter (€ 32 million).

    Revenue growth and cost control has resulted in the riseof Core Profit excluding Balkans(core income less operating expenses and provisions)by 7% in 2Q 2003 compared to 1Q 2003 and by 3.4% on a yearly basis.

    Core Profit
    (excluding Balkans)

    The 11.5% increase in 1H 2003 net profits has led to an improvement of (after-tax) return on average Assets from 0.79% in the first quarter to 0.88% in the first half of the year. Similarly, (after-tax) return on average Equity improved to 13.4% in the firs half of 2003, from 13.3% in the first quarter of 2003 and 9.4% in year 2002. It is worth noting that the Return on Required Equity reached 18.2%.


    EFG Eurobank Ergasias has long opted for reporting its financial results according to IAS and GAS, focusing however the analysis of these results in the statements prepared according to IAS. Financial statements and results based on IAS fully reflect the Group’s financial position, and allow for comparisons with other banks worldwide. On the other hand, GAS are restricted by Greek tax legislation.

    According to Greek GAAP, the results for the Group of EFG Eurobank Ergasias in 1H 2003 are as follows:

    Total Assets amounted to € 25.6 billion, from € 21.6 billion in 1H 2002. Loans and advances to clients reached € 14.7 billion, from € 11.7 billion. Customer Deposits stood at € 17.4 billion, from € 16.4 billion at the end of June 2002. Total Shareholders’ Equity increased to € 1.9 billion. Net Interest Income amounted to € 412 million from € 350 million, while the net interest margin remained above 3%. Net commission income rose 22% to € 140 million. As a result, Core Income (net interest income and net fee and commission income) reached € 552 million from € 465 million in 1H 2002. Total Operating income rose 19% to € 576 million. Consolidated profit before tax after minorities amounted to € 162 million, from € 148 million. Consolidated net profit after tax and minoritiesincreased 7% to € 116 million.


    EFG Eurobank

    Key Figures
    according  to IAS     

    1H 2003

    1H 2002

    % change

    Figures of Balkan subsidiaries
    1H 2003

    (in million euros)


    Total Assets3

    25.73421.83617,9%676 4

    Net Loans & Advances to Customers3


    Due to Customers3


    Shareholders’ Equity

    1.9551.8704,6%134 4


    Net Interest Income


    Net Commission Income


    Core Income


    Total Operating Income


    Core Profit


    Profit before tax after minorities


    Net profit after tax & minorities

    3 excluding settlement balances

    4 Includes € 16.3 m corresponding to 43% of the equity of Bulgarian Post Bank, accounted for as an associate under the Equity Method