First Quarter 2004 Results

• Strong loan growth of 25% to € 17.4 billion(1)
• Total Operating Income rises 23% to € 348 million
• Cost/Income ratio in Greece drops below 50% for the first time
• Net profit up 50% to € 88 m.

Including the Group ’s SE European subsidiaries (1), (gross) Group customer Loans grew a strong 25% in 1Q 2004, reaching € 17.8 billion (2), with household lending rising 34% to € 7.5 billion and Business lending increasing 19% to € 10.4 billion.Consumer Credit in Greece and in the Region expanded by 32% to € 4.1 billion while Mortgages advanced by 35% to € 3.4 billion. These robust growth rates reflect the important role of Eurobank in household and business lending both in Greece and in the wider region.

At thesame time, the quality of the loan portfolio is steadily improving. It is worth noting that during 2003, the Bank revamped and strengthened its credit approval, credit control and collection functions, an initiative that is already producing tangible results.The total NPL ratio fell to 3.2% at the end of March, from 3.3% at the beginning of 2004, while Organic NPLs stood at 2.7%, compared to 2.8% at the end of Dec 2003. Efficient risk management and disciplined provisioning (NPL coverage ratio at 82%) are important at Eurobank, to ensure the steady improvement of shareholder returns.

The continuous strong growth in retail banking led to a notable rise of Net Interest Income (NII) by about 15% to € 234 million. Net interest income contributed 67% to Total Operating Income and was 6% higher than the respective figure of 4Q 2003. NII growth was driven by the 32% rise in the margin on loans, which reached € 169 million, contributing 72% to total NII. The Net Interest Margin (net interest income over avg. total assets) remained above 3%, reflecting the profitable loan mix and efficient management of total assets.

Strong lending volumes and the Group’ s leading position in Asset Management and Capital Market activities, together with the expansion in Life Insurance contributed to the substantial increase of Net Fee and Commission Income by 28% to € 84 million. Improved capital market conditions since 1Q 2003 led market-related fees 113% higher to € 15.5 million. Asset management fees also recorded a notable 127% leap to € 17.2 million, from € 7.6 million in 1Q 03 and € 13.2 million in 4Q 03, reflecting further market share gains in mutual funds management and an improving asset mix. 

Core revenues,comprising of Net Interest and Net Fee income, account for 91% of total operating income, which underlines the quality of Eurobank revenues. At the end of March 2004, Core Income advanced 18%,reaching record levels of € 318 million. Other Incomealso improved, reaching € 30 million compared to € 13 million in 1Q 2003, mainly driven by profit from financial operations.

Consequently, Total Operating Incomerecorded a buoyant increaseof 23%,from € 282 million to € 348 million, largely driven by the growth in Core Income. Eurobank’ s ability to achieve double-digit growth in organic and total revenues is directly linked to the clear strategic focus and leading position in the higher margin and faster growing segments.

Committed to efficiency enhancement, Eurobank managed to contain cost growth in Greece to 1.4% (3.8% on a comparable basis(3). As a result, the Cost to Income ratio in Greece dropped for the first time below 50% to 47.9%. Including SE Europe subsidiaries (and Bulgarian Bank Post for the first time), total operating expenses increased 8.1% to € 175 million, driving the Group Cost to Income Ratio sharply down from 57.3% in 1Q 2003 to 50.2% in 1Q 2004.

Total provisions under Greek accounting standards, including general risk provisions, rose 26% reaching € 44 million, compared to € 35 million in the respective quarter of the previous year.

Consequently Eurobank ’s Core Profit (net interest income plus net fee income less operating expenses less provisions) climbed 36% to a fresh record of € 99 million in 1Q 04. 

The substantial improvement in the profitability of the Group led to a rise in after-tax Return on average Assets (ROA) from 1.0% in 1Q 03 tο 1.29% in 1Q 04. Similarly, after-tax return on average Equity (ROE), at a capital adequacy ratio of 10.2%, increased substantially to 19.0%, compared to 12.71% in 1Q 03. The Return on Required Equity corresponding to a capital adequacy ratio of 8% stood at 21.8%.
 

Having fully integrated seven financial institutions and completed extensive group reorganization and major system integration, Eurobank focuses on business development and cross-selling, while at the same time it emphasizes rigorous cost discipline.

The performance of 1Q 2004 confirms that EFG Eurobank Ergasias is on track to meet management targets of 14% growth in Total Operating Income and 20% growth in Earnings Per Share for 2004 and 2005.