National Bank of Greece has reported excellent half-year
figures. The results were marked by the speed and size of the
contribution from the bank’s Turkish subsidiary, Finansbank. The
group’s strategic goal of becoming a south-east Europe regional
powerhouse seems to be largely on track, reports Truong

Turkey’s Finansbank has proved an excellent investment for
National Bank of Greece (NBG). The Turkish bank, which is the
country’s eighth largest in terms of assets and was bought by NBG
in April last year, contributed 31 percent – some €244 million
($344 million) – to group half-year profit. Nearly 40 percent of
NBG’s overall profit came from its overseas operations, showing not
only how significant Turkey has become to the bank, but also how
important are its operations in the likes of Ukraine, Romania and

NBG was one of the first banks to enter the emerging Turkish
market, and the country has since attracted a number of
international banking groups: Citigroup took a 20 percent stake in
Akbank for $3.1 billion in January and ING acquired Oyak Bank, the
country’s 11th-largest lender, for $2.67 billion in June.

Profits to date from Finansbank – in which NBG has now amassed a 90
percent stake – already represent 11 percent of NBG’s outlay for
the acquisition.

Overall, NBG announced a half-year group net profit of €878
million, a 61 percent year-on-year rise. As of the first half of
2007, NBG, the oldest and largest of the Greek banks with 561
domestic branches and nearly 1,400 ATMs, had total assets of €82.3
billion. Group net profit for its domestic Greek market grew a
considerable 35 percent.

Talking about his bank’s Turkish profits, Takis Arapoglou, chairman
and CEO of NBG, said: “This figure is even more impressive when we
remember, first, that the Turkish banking market is still in the
early stages of development and, second, the dynamism Finansbank
will acquire with the expansion of its branch network, which, by
the end of the year, will have practically doubled since the
signing of the agreement.”

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Finansbank has a network of 371 branches. During the first half of
2007, two new branches were added to the group’s network each week.
Retail lending at the Turkish subsidiary grew by more than 50
percent, while mortgage lending was up by 64 percent. This gave
Finansbank a 10 percent share of the Turkish mortgage market,
totalling €1.45 billion.

A similarly robust figure of 47 percent growth was posted by
consumer lending, which amounted to a 5.4 percent market share.
Customer deposits posted a strong 9 percent growth to total €2.96
billion by June 2007, which is a reflection of the standing that
Finansbank enjoys among its wider customer base in Turkey, said

NBG’s operations in Serbia, Romania, Bulgaria and Albania posted a
29 percent growth in core profits. Following the acquisitions of
Finansbank in Turkey and Vojvodjanska Banka in Serbia, and the
continuing expansion of the bank’s operations across south-eastern
Europe, NBG says its strategic priority is now to achieve complete
functional integration of its overseas subsidiaries. More than 200
staff members have been mobilised across the group to achieve this
goal, participating in some 50 projects designed to realise the
effective integration of the new acquisitions.

In Greece itself, NBG’s total retail lending grew to €23.2 billion,
up 20 percent from the previous year. Consumer lending and credit
card balances totalled €4.9 billion, a 15 percent year-on-year
rise, while lending to SMEs and professionals was up by 34 percent,
reaching €3.2 billion in June 2007; the number of partner
businesses increased by 10 percent. However, it was mortgage
lending that provided the backbone for NBG’s domestic growth: in
the first half of 2007, NBG granted more than one-quarter of all
new mortgages in Greece.

As a result, mortgage lending grew by 20 percent to €15 billion,
sustaining the dominance of NBG in this critical segment of the
domestic market. These impressive figures have come off the back of
a Greek economy that has grown about 4 percent annually since 2004,
despite predictions that it would slow down following the 2004
Olympics in Athens. The bank has been riding a recent consumer
lending boom in Greece, in part due to lowered interest rates, a
buoyant property market and the relaxing of consumer credit

Ratings agency Fitch has reported that south-eastern Europe and
eastern Mediterranean banking assets of the four biggest Greek
banks have more than doubled since 2005 to account for 13.5 percent
of total regional banking assets at year-end 2006. Greek banks have
significant market shares in most of the Balkan countries and their
branch network in the region (including Turkey, Egypt and central
eastern Europe) now exceeds 2,000 outlets.

“Most Greek banks expect their international operations to become a
significant revenue pillar in the short to medium term. They expect
international branch networks to outstrip domestic branches in two
to three years,” said Cristina Torrella, a director in the
financial institutions team at Fitch.