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Ilias Lekkos Lekkosi@piraeusbank.gr Irini Staggel Staggelir@piraeusbank.gr Kostas Kefalas Kefalask@piraeusbank.gr researchdivision@piraeusbank.gr Bloomberg Page: <PBGR> Piraeus Bank 4 Amerikis Street, 105 64, Athens, Greece Tel: (+30) 210 328 8187, Fax: (+30) 210 328 8605

The discourse on the Greek economy currently revolves around 4 main themes: Fiscal Gap Funding Gap Debt sustainability Funding for Growth 2

In terms of budget execution, it hasn t been a smooth ride but the government has made a remarkable effort and we believe it is going to be on target. The fiscal gap identified for 2015-2016 amounts only to 4.1bn (or 2% of GDP). A small funding gap does exist due to lower than expected privatization receipts and the fact that NCBs reneged on their promise to roll over maturing debt. The funding gap is estimated to 10.9bn for 2014-2015. Debt sustainability is significantly more contentious than the fiscal and funding gaps. Troika s DSA was always controversial (at least to us), priced to perfection and with a substantial degree of reverse engineering. It is our view that a decision should not provide a short-term patch but a viable and robust long-term solution. Funding for growth. Our long term view is that due to the decline in disposable income and the fiscal consolidation effort both private and public consumption will continue to decline. Furthermore, credit constraints and high interest rates do not create an environment conductive to private sector investment. As a result an investment-led recovery can materialize only if the public sector increases its capital expenditure on large infrastructure projects. In order for that to happen the necessary funds must be appropriated preferably from EU Structural Funds. 3

Developments in the Greek economy are turning out to be better than our baseline scenario. The main driver behind that improvement is the better than expected Q2 GDP growth that came in at -3.8% versus -6.4% in the same quarter of 2012. The main driving forces of this improvement seem to be the performance of the accommodation & food and beverage service activities industries and other services, due to the positive impact of tourism, as well as the positive contribution of the external trade balance. Nevertheless based on the currently available data, the economy in the first half of 2013 has contracted by 4.7% which creates an up-side risk for our real GDP forecasts. One risk factor comes from nominal GDP which in H1-2012 shrank by 6.65%. This gap is indicative of a very large and negative GDP deflator which is very difficult to reconcile against the very mild CPI deflation recorded thus far. On the positive side though, the much better than originally envisaged tourism season will exert a positive impact on Q3 macro data. Tourism recovery in conjunction with a series of government sponsored employment programs will also contribute to the deceleration in the pace of unemployment expansion. 4

Economic Outlook 2009 2010 2011 2012 Piraeus Bank 2013 Real GDP Growth (YoY % change) -3.1-4.9-7.1-6.4-5.5 to -5.0 Nominal GDP (billion ) 231.1 222.2 208.5 193.7 180 to 182 (YoY % change) -0.9-3.9-6.1-7.1-7.0 to -6.0 Inflation 1.2 4.7 3.3 1.5-0.8 to 0.0 Unemployment rate (% of labour force) Current Account Balance 9.5 12.5 17.7 24.2 27.5 to 28.5 (billion ) -25.8-22.5-20.6-6.5-3.0 to -2.0 (% of GDP) -11.2-10.1-9.9-3.4-1.7 to -1.1 General Government Primary Balance* (billion ) -24.2-10.9-4.9-2.5 (% of GDP) -10.5-4.9-2.4-1.3 General Government Debt balanced (billion ) 299.7 329.5 355.2 303.9 320 (% of GDP) 129.7 148.3 170.3 156.9 176 to 178 *Calculations based on program definitions as outlined in the TMU. Source: Bank of Greece, ELSTAT, IMF Country Report No. 13/241, July 2013, Piraeus Bank Research 5

The IMF is expecting an investment-led recovery. Selected Economic Indicators Source: IMF Country Report 13/241, July 2013 6

level According to our mapping of the business cycle, the Greek business climate seems to be exiting the contraction phase. 2.0 downswing Economic Climate Tracer expansion 1.0 Jan '00 0.0 July '13-1.0-2.0-3.0 contraction upswing -4.0-0.25-0.2-0.15-0.1-0.05 0 0.05 0.1 0.15 mom change Source: European Commission DG ECFIN, Piraeus Bank Research 7

Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Our Financial Distress Index (FDSI), which reflects the conditions of liquidity and solvency not only of the banking sector, but of the Greek economy as a whole (i.e. financing needs of the Greek Government, current account deficit, credit bureau data and changes in loans and deposits), has shown a remarkable retrenchment, mirroring the substantial decline in the financial stress of the Greek economy. Greek Financial Distress Index 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0 Source: Bank of Greece, Teiresias, Bloomberg, Ministry of Finance, Piraeus Bank Research 8

Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. The Current Account shows an unprecedented improvement 0 Current account balance (cumulative, mn ) -5000-10000 -15000-20000 -25000 2010 2011 2012 2013 Source: Bank of Greece, Piraeus Bank Research 9

May-10 Sep-10 Dec-10 Jan-11 Mar-11 Jul-11 Dec-11 Mar-12 Apr-12 May-12 June-12 Dec-12 Jan-13 Feb-13 May-13 June-13 July-13 while Official Sector Funding to Greece has resumed. Currently the combined disbursements of the two economic programmes amount to 214.5 bn, 73.1 bn from the first and 141.4 bn from the second. Disbursements of the Economic Programmes ( bn) 45 250 40 35 183.0 188.2 191.0 205.2 210.2 214.5 200 30 25 147.7 148.7 143.5 150 20 15 53.1 65.0 73.1 111.8 100 10 29.1 31.6 38.1 50 5 0 20.0 0 EU - EFSF other tranches Bank recapitalisation PSI & DBB EU -Bilateral IMF Total (cumulative), RHS Source: IMF, MinFin, EFSF, Piraeus Bank Research 10

January Jan-Feb Jan-Mar Jan-Apr Jan-May Jan-Jun Jan-Jul Jan-Aug Jan-Sep Jan-Oct Jan-Nov Jan-Dec and Fiscal Consolidation is progressing. 4,000 2,000 0-2,000-4,000-6,000-8,000 Primary Balance (State Budget, cumulative, mn ) -10,000 2010 2011 2012 2013 Source: MinFin, Piraues Bank Research 11

Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 but Greece remains in recession. Since the second quarter of 2012, the rate of decline in real GDP is lower than the equivalent for GDP at current prices. This divergence indicates a negative deflator, which expanded in late 2012. This divergence is partly associated with investment activity - which includes the construction sector and housing and with public consumption, which includes wage costs and primary expenditures. GDP (YoY % change, nsa data) GDP deflators 15.0 10.0 5.0 0.0-5.0 20.0 15.0 10.0 5.0 0.0-5.0-10.0-15.0-10.0 Constant prices Current prices Private Consumption Gross Capital Formation Exports GDP Public Consumption Gross Fixed capital formation Imports Source: ELSTAT, Piraeus Bank Research 12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 215,000 205,000 195,000 185,000 175,000 165,000 155,000 GDP ( mn, constant prices) 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 Gross Fixed Capital Formation ( mn, constant prices) 145,000 20,000 15,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 GDP Private Consumption ( mn, constant prices) 41,000 39,000 37,000 35,000 33,000 31,000 29,000 27,000 Gross fixed capital formation Public Consumption ( mn, constant prices) 25,000 Private Consumption Public Consumption Source: ELSTAT, Piraeus Bank Research 13

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 85000 80000 75000 70000 65000 60000 Imports of goods and services ( mn, constant prices) 55000 50000 45000 40000 Exports of goods and services ( mn, constant prices) 55000 50000 45000 35000 30000 Imports of goods and services Exports of goods and services Source: ELSTAT, Piraeus Bank Research 14

Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 The decline in consumption reflects lower incomes and higher unemployment. 30.0 25.0 Households Disposable Income & Consumption (YoY %, current prices ) 1.5 1.0 Hiring Intentions (normalized data, sa, 3m moving average) 20.0 0.5 15.0 0.0 10.0 5.0 0.0-0.5-1.0-5.0-1.5-10.0-2.0-15.0-2.5 Gross Disposable Income Final consumption Source: ELSTAT, European Commission DG ECFIN, Piraeus Bank Research 15

Public expenditure is expected to continue its sharp contraction until end-2014. 120.0 General Government s Primary Expenditure (bn ) 110.0 100.0 90.0 80.0 70.0 60.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: ELSTAT, IMF country report 13/241, Piraeus Bank Research 16

Q1/98 Q4/98 Q3/99 Q2/00 Q1/01 Q4/01 Q3/02 Q2/03 Q1/04 Q4/04 Q3/05 Q2/06 Q1/07 Q4/07 Q3/08 Q2/09 Q1/10 Q4/10 Q3/11 Q2/12 Q1/13 And after 5 years of contraction, a substantial gap has developed between supply and demand. 2.0 Real-time Output Gap Index 1.0 0.0-1.0-2.0-3.0-4.0-5.0-6.0-7.0 Source: European Commission DG EcFin, ELSTAT, Piraeus Bank Research 17

Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Excess supply and high interest rates will keep investments at low levels. 81.0 79.0 77.0 75.0 73.0 71.0 69.0 67.0 65.0 63.0 Level of Capacity Utilization in Manufacturing Industry (%, sa) 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Average Real Interest Rate on New bank loans (< 1mn) to Non-financial corporations (nominal rate minus change in HICP, %) Current level of capacity utilization (%) Average (2001-2012) Data collected in January, April, July and October each year Euroarea Greece Source: European Commission DG EcFin, ECB, BoG, Eurostat, ELSTAT, Piraeus Bank Research 18

Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Despite their decline, house prices have, in reality, become more expensive relative to households after-tax income, since 2010. 110 House price vs Income (Index, 2009=100) 105 100 95 90 85 House price / Households Gross disposable Income per capita (index) House price / GDP per capita (index) Source: ELSTAT, Bank of Greece, Piraeus Bank Research 19

Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13 Aug-13 PIP expenditure has failed to take off Public Investment Programme (mn ) 1100.0 1000.0 900.0 800.0 700.0 600.0 500.0 400.0 Disbursements (12m moving average,flows) Source: MinFin, Piraeus Bank Research 20

Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. and will remain at its 2013 level for the foreseeable future. Public Investment Programme (mn ) 12000 10000 8000 6000 4000 2000 0 2008 2009 2010 2011 2012 2013 Source: MinFin, Medium Term Fiscal Strategy 2013-2016, Piraeus Bank Research 21

Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. The reorientation of the Greek economy towards a more export driven paradigm has began, but it will be a long time until the transformation is complete. At the same time, the weak economic activity in the EU bodes ill for further exports growth. Turnover Index in Industry (YoY% change) Balance of Payments Travel Balance (mn ) 80.0 60.0 40.0 20.0 0.0-20.0-40.0-60.0 9000 8000 7000 6000 5000 4000 3000 2000 1000 0-1000 domestic market non - domestic market 2010 2011 2012 2013 Source: Bank of Greece, ELSTAT, Piraeus Bank Research 22

Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 The decline in imports is the main driving force behind the improvement in the external sector. 8000 Net Exports (mn, current prices) 6000 4000 2000 0-2000 -4000-6000 Exports (t - t(-4)) Imports, reversed sign, (t - t(-4)) Net exports (t - t(-4)) Source: Bank of Greece, ELSTAT, Piraeus Bank Research 23

Real GDP (YoY%) A 5% decline in the real GDP indicates a 4.5% increase in the unemployment rate. Economic Growth vs Unemployment rate 10.0 8.0 y = -1.6129x + 2.3601 R² = 0.711 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0-12.0-2.0 0.0 2.0 4.0 6.0 8.0 Yearly change of Unemp. Rate Source: ELSTAT, Piraeus Bank Research 24

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 A bird s-eye view of the evolution of Greek debt From 2009 onwards, the evolution of the debt to GDP ratio has been driven by the snowball effect caused by the negative dynamics of nominal GDP vs debt servicing costs. This trend has been affected by the PSI and the Buy - Back. Driving Factors of Debt as % of GDP 30.0 20.0 10.0 0.0-10.0-20.0-30.0-40.0 Stock - flow adjustment "Snow-ball" effect Primary Balance (reverse sign) i.e: "+" is a deficit " -" is a surplus Δ (debt) Source: Ameco Database, DG ECFIN: European Economy No.64/1997, IMF country report No. 13/20, January 2013, Piraeus Bank Research Research 25

Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 level According to our mapping of the business cycle, the Greek business climate seems to be exiting the contraction phase. Economic Climate Tracer Economic Sentiment Indicator (1990-2012=100, sa) 2.0 downswing expansion 120.0 1.0 Jan '00 110.0 0.0 100.0-1.0 July '13 90.0 80.0-2.0 70.0-3.0 60.0 contraction upswing -4.0-0.25-0.2-0.15-0.1-0.05 0 0.05 0.1 0.15 ESI, Greece ESI, EU-27 Average Level, Greece (2001-2012) mom change Source: European Commission, DG ECFIN, Piraeus Bank Research 27

Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Our Financial Distress Index (FDSI), which reflects the conditions of liquidity and solvency not only of the banking sector, but of the Greek economy as a whole (i.e. financing needs of the Greek Government, current account deficit, credit bureau data and changes in loans and deposits), has shown a remarkable retrenchment, mirroring the substantial decline in the financial stress of the Greek economy. 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0 Greek Financial Distress Index 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Average Real Interest Rate on New bank loans (< 1mn) to Non-financial corporations (nominal rate minus change in HICP, %) Euroarea Greece Source: Hellenic Statistical Authority (ELSTAT), Bank of Greece, Teiresias, Bloomberg, Ministry of Finance, ECB, Eurostat, Piraeus Bank Research 28

Q1/00 Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 In Q2 2013 real GDP decreased by 3.8% y-o-y versus -6.4% y-o-y in Q2 2012. Consequently, during the first half of 2013, the economy contracted by 4.7% on average, according to non-seasonally adjusted data. In nominal terms, GDP shrunk by 6.65% in H1/13 (-6.1% in Q2 13). According to our estimates for seasonally adjusted data, in Q2/13 real GDP contracted by 0.3% q-o-q. Real GDP GDP (% change) 10.95 10.90 10.85 10.80 10.75 10.70 10.65 10.60 10.55 10.50 10.0 8.0 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0 ln (GDP, nsa, mn ) ln (GDP, sa, mn ) Note: Seasonally adjusted data according to PrB estimates GDP_sa_2005=100 (QoQ% change) GDP_sa_2005=100 (YoY% change) GDP_nsa_2005=100 (YoY % change) Note: Seasonally adjusted data according to PrB estimates Source: ELSTAT, Eurostat, MINFIN,Piraeus Bank Research 29

Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Indicators of Public and Private Economic Activity still remain at extreme negative levels but a marginal pick up is observed at the year-end. 3 2 1 0-1 -2-3 -4-5 Economic Activity Indicators 10 8 6 4 2 0-2 -4-6 -8-10 GDP estimate based on Economic Activity Indicators Private Activity Public Activity Actual Fitted Source: Eurostat, ELSTAT, MinFin, Piraeus Bank Research 30

Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13 125 115 Industrial production (YoY % change & level) Industrial Production Index (Level) Average Level (2001-2012) Level After five years of recession, industrial production declined by a further 3.4% during 2012 (2011: -7.8%). This result can be mainly ascribed to the contraction in the manufacturing sector of 4.2% (2011: -8.5%). 105 95 85 75 At the same time, confidence followed an upward trend during the recent months but remains below its long-term average. 65 Industrial confidence indicator (sa) 10 % change 20.0 5 10.0 0 0.0-5 -10-15 -10.0-20.0-30.0 YoY % change -40.0 Industrial Confidence indicator (sa, level) Average Level (2001-2012) Source: ELSTAT, European Commission, DG ECFIN, Piraeus Bank Research 33

Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Both the level of capacity utilization and the duration of production assured by current order books are below their respective long-term averages. 81.0 79.0 77.0 75.0 73.0 71.0 Level of Capacity Utilization in Manufacturing Industry (%, sa) Duration of production assured by current order-book levels in Manufacturing Industry (months, sa) 6.5 6.0 5.5 5.0 4.5 69.0 67.0 65.0 63.0 4.0 3.5 3.0 Current level of capacity utilization (%) Average (2001-2012) Duration of production assured by current order-book levels Average (2001-2012) Data collected in January, April, July and October each year Source: European Commission, DG ECFIN, Piraeus Bank Research 34

Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 At current prices (turnover data) the 50.0 40.0 30.0 20.0 10.0 0.0-10.0-20.0-30.0-40.0-50.0-60.0 contraction of the Services sector s output has shown some signs of moderation. Nevertheless, the sharp contraction during the last 3 years has driven confidence to record low levels. The index seems to rebound in early-2013. Services confidence indicator (sa) 170.0 150.0 130.0 110.0 90.0 70.0 50.0 20.0 10.0 0.0 Turnover Index in Services (excl. trade & auto) (YoY % change & level) Turnover Index in Services, excl. Trade & Auto (Level) Average Level (2001-2012) Level % change -10.0 Confidence indicator in Services (sa, level) Average Level (2001-2012) -20.0-30.0 YoY % change Source: European Commission, DG ECFIN, Eurostat, Piraeus Bank Research 35

Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Q1/00 Q3/00 Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Industrial companies are relying on external demand in order to maintain their sales and production levels. Industrial companies assessment of order book levels (sa, difference of % positive above normal negative below normal answers) Industrial companies expectations of exports* & production**(sa, difference of % positive will increase negative will decrease answers) 10 0-10 -20-30 -40-50 -60-70 50 40 30 20 10 0-10 -20-30 order-book levels export order-book levels production expectation export expectation * Quarterly data, collected in January, April, July and October each year ** The respective monthly data are being used Source: European Commission, DG ECFIN, Piraeus Bank Research 36

Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 The reorientation of the Greek economy towards a more export driven paradigm has began, but it will be a long time until the transformation is complete. At the same time, the weak economic activity in the EU bodes ill for further exports growth. Turnover Index in Industry (YoY% change) New Orders in Manufacturing (YoY% change) 80.0 60.0 40.0 20.0 0.0-20.0-40.0-60.0 100.0 80.0 60.0 40.0 20.0 0.0-20.0-40.0-60.0 domestic market non - domestic market domestic market non - domestic market Source: ELSTAT, Piraeus Bank Research 37

Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. For the first time since 2000 (first available data), a surplus was recorded in the trade (excl. oil & ships) and services balance during 2011 and this has shown further strength in 2012 and 2013 respectively. However, this is mainly a result of reduced imports, rather than increased exports. Moreover, this recovery is partly due to the decline in investment activity. Imports of goods vs GFCF Transport equipment, Metal products & machinery (YoY% change, constant prices 2005, nsa) 50 8000 Trade of Goods Balance (excl. oil & ships) & Services Balance (mn ) 40 30 20 10 0-10 -20 6000 4000 2000 0-2000 -4000-30 -6000 GFCF Transport equipment, Metal products & machinery Imports of goods 2010 2011 2012 2013 Source: Bank of Greece, ELSTAT, Piraeus Bank Research 38

Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. Positive expectations about tourism can lead to an improvement in the travel and transportation balances from mid 2013 onwards. Balance of Payments Travel Balance (mn ) Balance of Payments Transportation Balance (mn ) 9000 8000 7000 6000 5000 4000 3000 2000 1000 0-1000 8000 7000 6000 5000 4000 3000 2000 1000 0 2010 2011 2012 2013 2010 2011 2012 2013 Source: Bank of Greece, Piraeus Bank Research 39

Jan. Jan.-Feb. Jan.-Mar. Jan.-Apr. Jan.-May Jan.-Jun. Jan.-Jul. Jan.-Aug. Jan.-Sep. Jan.-Oct. Jan.-Nov. Jan.-Dec. The improvement in the current account deficit has been persistent and broad based (i.e. improvement is recorded in all categories such as the trade, services, income and current transfers balances). Current account balance (mn ) Current Account Decomposition (% of GDP) 0 15.0 10.0-5000 -10000 5.0 0.0-5.0-15000 -20000-10.0-15.0-25000 -20.0-25.0-30.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2010 2011 2012 2013 Current Transfers Services Ships Income Trade of Goods excl Oil & Ships Oil Source: Bank of Greece, ELSTAT, Piraeus Bank Research 40

Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 The construction sector has been one of the hardest hit economic sectors. As a result, the construction confidence indicator remains on negative territory. 10000 Building permits (YoY % change & level) Building Permits (Total, number - Level) Average Level (2001-2012) Level 8000 6000 Construction confidence indicator (sa) 4000 20.0 2000 10.0 0.0-10.0-20.0-30.0-40.0-50.0-60.0-70.0-80.0-90.0 0 60 40 20 0-20 -40-60 -80 % change Confidence indicator in Construction (sa, level) Average Level (2001-2012) YoY % change Source: European Commission, DG ECFIN, ELSTAT, Piraeus Bank Research 41

Q1/00 Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13 Aug-13 The decline in both residential construction and infrastructure investment has pushed the Production in Construction index to very low levels. The drop in the Civil Engineering Index primarily reflects the under-performance of the Public Investment Programme. Production Index in Construction (level, 2005=100) Public Investment Programme (flows, mn ) 350 300 250 200 150 100 50 0 1100.0 1000.0 900.0 800.0 700.0 600.0 500.0 400.0 Production Index in Construction Production Index of Civil Engineering Production Index of Building Construction Disbursements (12m moving average,flows) Source: MinFin, ELSTAT, Piraeus Bank Research 42

Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13 Higher indirect taxes, declines in disposable income and high unemployment have pushed consumption and retail trade to record lows. Up to a point, such a shift away from consumption is desirable as part of the reorientation of the Greek economy. Retail trade confidence indicator (sa) 50.0 40.0 30.0 20.0 10.0 0.0-10.0-20.0-30.0-40.0-50.0-60.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 20.0 10.0 0.0-10.0-20.0-30.0 Retail trade excl. automotive fuels (volume, YoY % change & level) Volume Index in Retail Sales, excl. automotive fuels (Level) Average Level (2001-2012) Level % change YoY % change Confidence indicator in Retail Trade (sa, level) Average Level (2001-2012) Source: European Commission, DG ECFIN, ELSTAT, Piraeus Bank Research 43

Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Wholesale trade has been severely hit by the economic crisis. Also car sales are running well below their long-term average. Car registrations (number of cars) 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 car registrations Average number (2005-2012) 160.0 150.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 15.0 10.0 5.0 0.0-5.0-10.0-15.0-20.0-25.0 Turnover index in Wholesale trade (YoY % change & level) Turnover Index in Wholesale Trade (Level) Average Level (2001-2012) Level % change YoY % change Source: ELSTAT, Piraeus Bank Research 44

Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 After the up-tick which is traditionally recorded during election periods, consumer confidence remains subdued, although it seems to rebound in early-2013. Consumer Survey Indicators (sa) 0.0-10.0-20.0-30.0-40.0-50.0-60.0-70.0-80.0-90.0 100 80 60 40 20 0-20 -40-60 -80-100 Consumer Confidence Indicator Average Level (2001-2012) Household Financial Situation next 12m Economic Situation next 12m Unemployment next 12m Savings next 12m Source: European Commission, DG ECFIN, Piraeus Bank Research 45

Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Employment continues to decline (-6.3% in Q1/13), while hiring intentions, an index we created using the Business & Consumer Survey s employment related questions, remains negative. Employment (YoY % change & level) Hiring Intentions (normalized data, sa, 3m moving average) 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0 4700.0 4500.0 4300.0 4100.0 3900.0 3700.0 3500.0 1.5 1.0 0.5 0.0-0.5-1.0-1.5-2.0-2.5 Employed, in thousands (RHS) YoY % change (LHS) average level (2001-2012), RHS Source: ELSTAT, European Commission DG ECFIN, Piraeus Bank Research 46

Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Yearly change of employed (thousands) 200.0 100.0 0.0-100.0-200.0-300.0-400.0-500.0 Primary sector Wholesale and retail trade; repair of motor vehicles and motorcycles Transportation and storage, Information and communication Education Other Sectors Secondary sector Accommodation and food service activities Other Services Human health and social work activities Total Primary Sector: Agriculture, forestry and fishing. Secondary Sector: Mining and quarrying, Manufacturing, Electricity, gas, steam and air conditioning supply, Water supply; sewerage, waste management and remediation activities. Other Services: Financial and insurance activities, Real estate activities, Professional, scientific and technical activities, Public administration and defense, compulsory social security. Other Sectors: Other service activities, Activities of households as employers, Activities of extraterritorial organizations and bodies. Source: ELSTAT, Piraeus Bank Research 47

Q1/00 Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 The unemployment rate climbed to 26.0% in Q4/12 (non-sa data) due to the sustained downward trend in payrolls, driving the annual unemployment rate to 24.2% of the labour force. In Q1/13, the rate increased further to 27.4%. According to monthly non-seasonally adjusted data, the unemployment rate in May 2013 reached 27.5% from 22.9% in May 2012. Based on seasonally adjusted data the unemployment rate in May was 27.6% compared to 23.8% in May 2012 and 27% in April 2013. Unemployment rate 30.0 30.0 25.0 24.2 25.0 20.0 17.7 20.0 15.0 12.5 15.0 10.0 11.4 10.8 10.3 9.7 10.5 9.9 8.9 8.3 7.6 9.5 10.0 5.0 5.0 Quarterly Data Yearly Data Unemployment Rate, (sa) Unemployment rate (nsa) Source: ELSTAT, Piraeus Bank Research 48

Q1/01 Q3/01 Q1/02 Q3/02 Q1/03 Q3/03 Q1/04 Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 In Q1/13, the percentage of the long-term unemployed -that is the percentage of people that have been looking for a job for more than 1 year- reached 65.6% from circa 44.6% at Q1/10. Unemployed by duration of unemployment (% of total) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than a month 1-2 m 3-5 m 6-11 m >12 m Source: ELSTAT, Piraeus Bank Research 49

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Inflation can be attributed to the spike in indirect taxes. Stripping out the effect of taxes, prices seem to have stabilized as inflation, based on HICP at constant taxes, reached 0.1% in 2012 (2011: 1.2%). In August 2013, inflation was in negative territory, to -1.3%, due to a decline in the prices of goods and services and weaker increases in energy prices. Contribution of CPI sub-indicators to inflation Effect of tax changes 6.0 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0-3.0 HICP constand tax (YoY % change) Effect of tax changes contribution of CPI Energy contribution of CPI Services (excl. electricity) contribution of CPI Goods (excl. fuels) Headline Inflation HICP (YoY % change) Source: ELSTAT, Eurostat, Piraeus Bank Research 50

According to the 2013 Budget, the general government deficit is expected to fall to 9.4 bn from 12.9 bn in 2012. Achieving this goal depends on the SSFs balance and more precisely on achieving a surplus of 2.7 bn against a deficit of 2.2 bn in 2012. Other key points in the 2013 Budget are: The ordinary budget deficit is estimated to stand at 9.5 bn (2012: 14.1 bn) through reduced expenditures, while the PIP will produce a deficit of 1.7 bn (2012: 2.2 bn) due to revenue growth. Hence, the budget deficit is estimated to total 11.2 bn versus 16.3 bn in 2012. However, if we take into account the national accounts deficit adjustments, a bigger deficit than in 2012 is ultimately created ( 14 bn from 13.4 bn in 2012). The surplus of Government Bodies other than Public Utilities is reduced to 738 mn. Similarly, the Public Utilities surplus is narrowed to 496 mn. The surplus in Local Governments stands at 589 mn. 51

mn 2011 2012 2013 Realisation Estimate of realisation Projections Α =Ι-ΙΙ Ordinary budget balance -19986-14149 -9480 Ι Net revenues of ordinary budget 50159 47706 46322 ΙΙ Expenditures of the ordinary budget 70145 61855 55802 Β = Ι-ΙΙ PIP balance -2786-2163 -1714 Ι Revenues 3773 4687 5136 ΙΙ Expenditures (1 ) 6559 6850 6850 C = Α+Β State budget balance -22773-16312 -11194 a Central Govenrment Adjustments (1+2) 2318 2925-2792 1 Central Govenrment Adjustments - Revenues 1277 1029-1784 2 Central Govenrment Adjustments - Expenditures 1041 1896-1008 D = C+a Total Balance (ESA-95) -20455-13386 -13986 Ε. Balance of govenrment bodies other than Public Utilities 646 1300 738 F. Public Utilities balance - reclassified inside the General 975 871 496 G. (i + ii) Local Governments 521 556 589 i LGs balance 422 145 439 ii Adjustments on LGs balance 99 411 150 H. (i+ii) SSFs balance (ESA-95) -1373-2223 2721 i SSFs balance -986-953 3178 ii Adjustments on SSFs balance -387-1270 -457 I. = D+Ε+F+G+Η General Government Balance (ESA 1995) General Government balance (ΕSA-95) -19686-12882 -9442 (% of GDP) -9.4% -6.6% -5.2% J. General Government Interest payments 14901 10486 10189 (% of GDP) 7.1% 5.4% 5.6% I+J. Primary balance of the general government (ΕSA-95) -4785-2396 748 (% of GDP) -2.3% -1.2% 0.4% GDP 208532 194003 183049 (1)Included expenditures amounting to 116.05 mn of PIP, disbursed through the Ordinary Budget. Not included PIP expenditures amounting to 116.05 mn of PIP, Bugdet. Not included PIP expenditures amounting to 48.5 mn for which not payment order was issued in 2011. Source: MinFin, Budget 2012, Oct.12', Piraeus Bank Research 52

million 2012 2013 Jan.-August 2013 2012 2013 Jan.-August Jan.-August 2013 Budget Difference Target 1/ ΜTFS Difference Outcome 2/ Estimates 3/ MTFS 2013-2016 Target 4/ Budget 2013 Ordinary Budget (1) (2) (2-1) (3) (2-3) (4) (5) (6) Net revenue 30,639 30,964 325 29,807 1,157 48,325 46,727 46,322 Revenues before tax refunds 5/ 33,036 32,027-1,009 31,564 463 51,482 49,542 49,137 Special revenue from licensing public rights 0 65 65 54 11 15 86 86 Tax refunds 2,397 1,128-1,269 1,811-683 3,172 2,901 2,901 Expenditures 42,971 34,840-8,131 36,970-2,130 61,499 53,457 55,802 Primary expenditure 31,276 28,436-2,840 30,376-1,940 47,529 45,150 45,050 Military procurement (on a cash basis) 188 173-15 269-96 410 750 750 Guarantees called 437 743 306 875-131 796 1,027 1,027 to bodies classified inside the General Government (net basis) 384 441 57 471-30 680 558 558 to bodies classified outside the General Government 53 302 249 404-102 117 469 469 Net interest payments 11,070 5,363-5,707 5,337 26 12,224 6,400 8,900 Loan disbursement fee to EFSF 0 124 124 113 11 541 130 75 Ordinary Budget balance -12,332-3,876 8,456-7,163 3,287-13,174-6,730-9,480 PIP Revenue 2,463 3,980 1,517 3,180 800 3,601 5,136 5,136 Expenditures 2,615 2,544-71 3,850-1,306 6,114 6,850 6,850 PIP Balance -152 1,436 1,588-670 2,106-2,513-1,714-1,714 0 0 0 0 0 0 0 0 State Budget Balance -12,484-2,441 10,043-7,833 5,392-15,688-8,444-11,194 State Budget Primary Balance -1,414 2,922 4,336-2,496 5,418-3,465-2,044-2,294 1/ Targets as included in the revised Medium Term Fiscal Strategy 2013-2016. 2/ Total State Budget expenditures and revenues outcomes for 2012 are provisional and will be confirmed following the Parliament ratification of the annual budget outcome review for 2012. 3/ The annual estimates are formed after the last review of the Greek economy and figures are included in the revised Medium Term Fiscal Strategy 2013-2016. 4/ Targets as included in the Executive Summary of the Budget for 2013. 5/ 1.5bn stemming from the transfer of future income from the Greek Government bonds holdings of National Central Banks of the Eurosystem (Securities Market Programme-SMPs) is included. It is noted that these revenues had not been taken into account in the 2013 State Budget, because they are stemming from the European Council decision of 26 and 27 November 2012, which came after State Budget was voted in the Hellenic Parliament. Source: Ministry of Finance, Piraeus Bank Research 53

Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 After a peak-to-trough decline of 105.5 bn, deposits (excl. General Government) had recovered to 179 bn by end-2012 and -according to the latest data- reached 176.2 bn in July 2013. After peaking at 272 bn in May 2010, loans had declined to 233 bn by December 2012. In July 2013 loans reached 227.2 bn. Total Deposits & Repos excl. GG ( mn) Total Loans & Corporate Bonds excl. GG ( mn) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 280,000 240,000 200,000 160,000 120,000 80,000 Category 1: Liabilities associated with assets disposed of in a securitization Deposits and Repos from EA & other countries' residents excl. categ. 1 Deposits and Repos from Households & Companies (Domestic) 40,000 Loans to Rest of the world Domestic Loans & Bonds, incl. securit Source: Bank of Greece, Piraeus Bank Research 54

Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Greece experienced strong loan and deposit growth between 2000-2008. Since the beginning of the crisis, the gap between the two has continued to grow. Moreover, both lending to the General Government and Government bond holdings increased substantially between end-2010 and 2011 to 60 bn, crowding out the private sector. Deposits & Loans, Domestic Private Sector (stock, mn ) Net Position with General Government* (Assets Deposits, mn) 300000 55,000 250000 45,000 200000 150000 100000 50000 0 35,000 25,000 15,000 5,000 Deposits (Domestic Corporations and Households, stock) Loans (Domestic, Corporations and Households, stock) -5,000 * In August 2011 domestic credit institutions registered a reduction in the value of their portfolio of Greek Government securities amounting to EUR 4 billion because of their participation in the securities exchange programme agreed by the EU Summit of 21st July 2011.In January 2012 credit institutions registered a further reduction in the value of this portfolio amounting to EUR 5.8 billion, in March 2012 a reduction of EUR 15.2 billion and in April 2012 a reduction of EUR 4.1 billion. Source: Bank of Greece, Piraeus Bank Research 55

Q1/01 Q1/02 Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q1/13 Q1/01 Q4/01 Q3/02 Q2/03 Q1/04 Q4/04 Q3/05 Q2/06 Q1/07 Q4/07 Q3/08 Q2/09 Q1/10 Q4/10 Q3/11 Q2/12 Q1/13 Given the strong domestic credit growth and Greece s economic expansion in the SEE area, the Greek banking sector has developed a funding gap. This gap between the sources and uses of funds has been exacerbated by the recent capital flight. However, the positive net flow of deposits at year-end led to a favourable outcome. The gap narrowed even further during the second quarter of 2013. Funding Gap in Domestic Private Sector (mn ) 15000 10000 5000 0-5000 -10000-15000 160000 140000 120000 100000 80000 60000 40000 20000 0-20000 Loans-Deposits (flows) Loans-Deposits (cumulative) Note: Funding Gap in Domestic Private Sector is calculated as the difference between the net flows of Loans minus the flows of Deposits & repos during the period. Net flows of Loans are derived from changes in outstanding amounts corrected for reclassifications, loan write-offs and exchange rate variations. Flows of Deposits & repos are derived from changes in outstanding amounts corrected for foreign exchange valuations and reclassification adjustments. Source: Bank of Greece, Piraeus Bank Research 56

Jan-01 Aug-01 Mar-02 Oct-02 May-03 Dec-03 Jul-04 Feb-05 Sep-05 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13 Given the practical difficulties related to reducing the stock of loans and the detrimental impact that this massive deleveraging would have on economic activity, Greek banks had no option but to substitute the lost deposits with Eurosystem funding. As a result, liabilities to the Eurosystem have increased from 4 bn in Jan 2008 to 132 bn in August 2012. An outlier was recorded in February 2012 ( 158 bn), due to the PSI procedure. The positive flow of deposits at year end facilitates the decline of the banking sector s reliance on Eurosystem funding. Liabilities to the Eurosystem (mn. ) 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Source: Bank of Greece, Piraeus Bank Research 57

Q1 2005 H1 2005 9M 2005 2005 Q1 2006 H1 2006 9M 2006 2006 Q1 2007 H1 2007 9M 2007 2007 Q1 2008 H1 2008 9M 2008 2008 Q1 2009 H1 2009 9M 2009 2009 Q1 2010 Η1 2010 9M 2010 2010 Q1 2011 Η1 2011 9M 2011 2011 Q1 2012 H1 2012 9M 2012 2012 Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Despite increases in provisions for non-performing loans, Greek banks have managed to increase their capital and reserve levels throughout the crisis period. Nevertheless their participation in the PSI process resulted in substantial losses for the Greek banking system. Non-performing Loans (% of total loans) Capital and reserves, (decomposition, mn. ) 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0-10,000-20,000-30,000-40,000 0.0 Consumer Corporate loans Mortgage Loans Total Loans Provisions for bad loans Capital and reserves Capital and reserves excl. provisions for bad loans Source: Bank of Greece, Piraeus Bank Research 58

One issue that we have touched upon only briefly is that of the role of the Balance of Payments in the evolution of deposits in particular and liquidity in general. Whether a CA deficit affects the liquidity conditions in an economy depends mainly on the way it is financed. Up until 2009, Greece serviced its financing needs by issuing (government & corporate) bonds and wholesale deposits. That is good quality liquidity that banks could use to grant new loans to Greek residents, create deposits, and so on. Since the onset of the crisis, we have seen a massive reduction in this good liquidity, which has been replaced by official lending from the troika loans as well as by some repatriation of intra-group corporate loans from foreign subsidiaries. Sources of Funding (mn ) 80,000 60,000 150,000 40,000 100,000 20,000 0 50,000-20,000 0-40,000-60,000-50,000-80,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-100,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Non-residents' Deposits & Repos with resident MFI Non-residents' net investment in Bonds & Notes issued by residents Residents' net investment in Bond & Notes issued by non-residents Residents' Deposits & Repos with non-resident MFI Loans granted by non-residents to residents Source: Bank of Greece, Piraeus Bank Research 59

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