FY 2002 RESULTS 1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This presentation may contain projections or other forward looking statements related to EFG Eurobank Ergasias S.A. that involve risks and uncertainties. Readers are cautioned that these statements represent the Group s judgments and future expectations and may differ materially from actual future results or events. Important risk factors that could cause actual results, performance or events to differ from those contained in the forward-looking statements, include, but are not limited to (1) general market, macroeconomic, governmental and regulatory trends, (2) movements in local and international securities markets, currency exchange rates, and interest rates, (3) competitive pressure, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties, and (7) legislation developments. All forward looking statements are based on information available to EFG Eurobank Ergasias S.A. on the date of this presentation and EFG Eurobank Ergasias S.A. assumes no obligation to update such statements, unless otherwise required by applicable law. Nothing on this presentation should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction. 2
Hosts and Contents Nicholas Nanopoulos, CEO Byron Ballis, Deputy CEO Paula Hadjisotiriou, CFO Market Environment Business Review Financial Highlights Financial Review Appendices 3
MARKET ENVIRONMENT 4
Above average growth in Greece Greece s GDP growth remains robust EU support transfers 2004 Olympics historically low interest rates Inflation remains high, eroding competitiveness Real GDP Gro wth 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 4.3 4.1 3.5 3.4 4 3.8 2.4 2.4 1.5 1.5 1.8 0.8 1996 1997 2000 2001 2002 2003f Greece Eurozone 5
Lending growth to continue at somewhat lower rates Household loans to GDP Total Credit to GDP 50% 40% 30% 20% 10% 22% Greece 45% Europe 100% 90% 80% 70% 60% 50% 40% 61% Greece 96% Europe Under-penetrated market points to further growth 15 10 Industrial Confidence Indicator (Greece vs EU) Despite a jump in industrial production in Q402, business confidence has recently shown signs of weakness 5 0-5 Household sector remains healthy -10-15 Greece Some weak areas in the Business sector Growing economy supports corporate debt restructuring efforts -20-25 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Euro zone Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03
Greek Banking Sector Competitive pricing pressures easing Stringent provisioning requirements by the Bank of Greece Prospective liberalisation of consumer credit Above average growth in lending, compared to Europe, to be concentrated in the retail segment 7
FY 2002 BUSINESS REVIEW
Robust growth in lending - 1% overall market share gain In m 3,000 2,500 2,000 1,500 1,000 500 0 Consumer Loans Outstanding Balances 2,061 32% 2,726 2001 2002 Leader in Consumer lending & credit cards Market shares of 26% and 32% respectively Mortgage lending up 33% y.o.y 11% market share, conservative lending criteria Small Business Lending -up 38% y.o.y. Wholesale Lending - up 15% y.o.y. In m 2,500 2,000 1,500 1,000 Mortgage Loans Outstanding Balances 1,729 33% 2,298 In m 8,000 6,000 4,000 Wholesale Loans Outstanding Balances 6,610 15% 7,598 500 2,000 0 2001 2002 0 2001 2002 9
Leader in Asset Gathering MARKET SHARE IN DEPOSITS 12% 11.1% 10% 8% 6% 20% 15% 10% 5% 0% 10% 2001 2002* * Sept 02 MARKET SHARE IN MUTUAL FUNDS excl. MM 15.8% 13.3% 6.5% 2000 2001 2002 Market share gain of 1% in deposits Market share gain of 2.5% in mutual funds (excl. money market funds) Customer funds at 23 bn, up 8% First mutual fund manager in Greece to receive fund rating from an international rating agency (S&P) 10
Leading investment bank in Greece Equity offerings EFG TELESIS FINANCE maintained top position in domestic equity capital markets. Market share rise to 34% in 2002 from 19% in 2001 BOP 7.8% EQUITY CAPITAL MARKETS OTHERS 16.1% MARKET SHARES EFG 33.9% Debt offerings Market leader in syndicated lending and corporate bond transactions NBG 14.6% CBG 7.1% ALPHA 20.5% M & A transactions DEBT CAPITAL MARKETS MARKET SHARES Completed major private sector transactions in 2002 in the construction, telecommunication, food and other sectors CITI 20.3% OTHERS 11.8% EFG 21.2% Advisor in privatizations and other public sector projects ALPHA 18.8% NBG 18.7% CBG 9.2% 11
Leading Greek broker Most Successful Merger EFG EUROBANK SECURITIES big market share gain is evidence of the success of the merger of Eurobank, Ergasias and Telesis Securities Athens Stock Exchange - First position with 13% of the market in 2002, from 9.7% in 2001 Athens Derivatives Exchange - Leader with 16.7% market share 16 12 8 4 0 Market Share in Brokerage 13% 9.7% 2001 2002 12
Regional expansion Acquisition of additional 17% stake in BANC POST, Romania s 3 rd largest bank, raising total stake to 36% (BPI 17% -GE Capital 9%) Consolidated fully since Nov. 2002 43% stake in POST BANK, Bulgaria s 4 th largest bank, consolidated under the equity method Recent Agreement to acquire 67% of POSTBANKA in Serbia Post Bank Bulgaria * Banc Post Romania * Postbanka Serbia ** Sept. million 2001 2002 % change 2001 2002 % change 2001 2002 % change Shareholders' Equity 36 38 5% 99 106 7% 6 6 5% Total Assets 325 401 23% 546 633 16% 15 13-11% Net Profit 2 4 72% 6 6 10% 0.2 0.3 45% * figures under IAS ** figures under Local Accounting Standards 13
Corporate Framework Redesign Creation of 2 integrated market-oriented divisions Retail Banking Wholesale Banking Across-the-bank client segmentation based on a cut-off-line at 2.5 m Clients with a turnover below 2.5M serviced by Retail Clients with a turnover above 2.5M serviced by Wholesale Eurobank & Ergasias networks integrated into a 2-pillar structure Retail: 300 Universal & Standard branches dedicated to serve individuals, professionals and small businesses Wholesale: 40 Business Centers dedicated to serve MEs Unification of distribution brands 14
Acquisition of EPER, EPAN closed-end funds Take advantage of large discounts to NAV that characterize Greek closed-end funds (negative goodwill to be booked in 2003) Reduce tax rate by 5 percentage points in 2003 and 2004 Streamline institutional asset management operations to reduce cost and increase efficiency Increase capital adequacy by 0.8% EGM to approve Ergoinvest (EPER) acquisition scheduled in March, EPAN to follow 15
FY 2002 FINANCIAL HIGHLIGHTS
FY 2002 - Key Points (IAS) Healthy growth in Core Income (NII+Fees) of 13% to 972m Operating cost running at 5% y.o.y on a comparable basis Core Profit (NΙI+Fees-Cost-Provisions) up 7% to 263 m Group Net Profit at 184m, down 10% y.o.y. Strong Capital Base at 1.9 bn - Tier 1 RAR at 11.7% Dividend of 0.47 per share, dividend yield at 4.7% 17
FY 2002 FINANCIAL REVIEW
Retail clients drive lending growth Loan mix (% of total) 100% 2001 2002 % y.o.y. growth 90% 80% 70% 60% 50% Wholesale: 59 % 25% 23% 34% Wholesale: 55 % 32% +15% 40% 30% 20% 10% 0% Retail: 41 % 7% 15% Retail: 45% 8% 17% 18% 20% 2001 2002 Corporate SMEs SBLs Mortgages Consumer +38% +33% +32% 19
Loan Book and Spreads In m Loans & Interest Spreads 12000 10000 8000 6000 13,341 12,476 11,919 11,359 10,953 10,266 9,852 1H 2001 9M 2001 2001 1Q 2002 1H 2002 9M 2002 2002 6 5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Loans Wholesale Spread Retail Spread 20
Prudent provisioning Strict provisioning policy in view of uncertainty and weakening business confidence Provision charge at 0.8% of avg. loans vs. 0.7% in 2001 Organic NPLs below 3% of total loan book Total NPLs at 3.6% of total loans NPL coverage at 84% 1.2 1.15 1.1 1.05 1 0.95 0.9 0.85 0.8 0.75 0.7 0.65 0.6 0.55 0.5 0.45 0.4 0.35 0.3 0.25 0.2 Bad debt provisions (% of avg. loans) 0.70 0.63 0.74 0.76 0.81 2001 March 2002 June 2002 Sept. 2002 2002 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Total NPL Ratio 3.8% 3.6% 1.0% 0.7% 2.8% 2.9% 2001 2002 Organic NPLs NPLs from Bank of Athens and CretaBank 21
Deposits & repos +11%, market share gain of 1% Deposits Breakdown* In m 18,000 15,000 15,287 2,318 11% 16,948 2,054 12,000 9,000 8,536 24% 10,584 6,000 3,000 0 (2.8)% 4,433 4,310 2001 2002 Savings Other Deposits Repos *excluding settlement balances 22
Customer Funds up 8% despite drop in value of equities Customer Funds In m 25,000 20,000 15,000 21,312 3,567 1,933 8% (13)% 25.1% 23,085 3,102 2,418 10,000 5,000 15,812 11.1% 17,564 0 2001 2002 Liquid Funds Mutual Funds Other investment products 23
Robust 17% growth in NII Net Interest Income NIM 3.37% 3.21% In m 800 700 600 614 45 17% 721* 54 94 * 716 m. excl. Banc Post 500 400 92 128 143 Money market mismatch Earnings on capital and bonds Margin on deposits 300 Margin on loans 200 350 430 100 0 2001 2002 24
and small rise in fee income in a challenging environment Fee Income Composition In m 180 160 140 120 100 80 60 40 20 0 1% 247 250 110 112 43 34 32 43 52 72 2001 2002 Increase in fees from credit cards, insurance, property, internet banking and other network services Pressure on fees related to equity brokerage, IPOs and equity asset mgmt Other Services Mutual Funds & AUM Capital Markets Lending activities 25
..contribute to good growth in Core Income NII & Fees +13% In m 700 862 972 247 13% 250 600 500 721 400 300 614 200 100 0 2001 2002 Net Interest Income Commissions & Fees 26
Recurring income Core Income (NII + Fees) In m 250 200 150 215 64 152 246* 75 171 229 61 168 238 239 57 59 181 180 266** 74 192 100 50 0 3Q 2001 4Q 2001 1Q 2002 2Q 2002 3Q 2002 4Q 2002 * Telesis first included in Q4 2001 ** 257 m deducting Banc Post 27
Non-Core Income: Equity losses outweigh bond & real estate gains In m 2001 2002 70 60 50 40 30 20 10 0-10 -20-30 -40 62.3 15 9 50-12 0.5 23.6 29-50 Lower Bond gains Negative results on equity positions (ASE down 33%) Measurement adjustments for reductions in market value of isolated equities -50-60 Bonds and Bond Derivatives Equities incl. associates FX and Derivatives Real estate gains 28
Total Operating income up 7% In m 1150 950 750 944 82 247 7% 1,005 34 250 550 350 614 721 150-50 2001 2002 Net Interest Income Fees and Commissions Other income 29
Underlying cost growth down to 5% Comparable Operating expenses 2002 reported costs include Banc Post (Nov 02) In m 600 550 500 450 400 350 300 250 200 150 100 50 0 572 68 205 299 5.2% 9.7% (3.2%) 9.9% 601 74 198 328 2001 2002 Personnel Administrative Depreciation 2001 reported cost figures only include Telesis in 4Q Comparable cost up 5.2% GR Personnel up 1.8% at 8,700 Higher personnel costs partly offset by decline in administrative expenses Depreciation up 9.7% compar. 30
Core profit up 7% Core Profit in 2001-2 In m 250 246 7% 263 200 150 151 100 50 0 2001 2002 Core Profit: (NII + Fees and Commissions) - (Operating Expenses + Provisions) 31
Strong capitalisation with RAR at 11.7% 13% 13% 12% 12% 11.7% 12.5% Shareholders Equity at 1.9 bn Tier 1 capital 1.8 bn RWAs at 15.2 bn 11% 11% 11% Capital Adequacy ratio enhanced by the consolidation of Banc Post 10% 2002 2002e 2003f Tier 1 - Risk Asset Ratio Tier 1 incl. Closed -end funds Merger with EPER & EPAN expected to boost RAR by a further 0.8% Equity to total assets and risk asset ratio are expected to remain high 32
Dividend & Share buyback Dividend Payout Policy & Share buy back Program reflect: Strong capitalization Tier 1 at 11.7% Underlying capacity to generate recurring earnings Core profit up 7% despite aggressive provisioning Dividend Yield at 4.7% compares favorably with peers Share Buy back Program to continue Returning retained earnings to shareholders 10m of treasury shares will be cancelled for EPER & EPAN merger 33
APPENDICES 34
Major Balance Sheet Items amounts in million 2002 2001 % change Total Assets * 24,723 19,199 28.8% Loans and advances to customers * 13,341 10,953 21.8% Due to customers * 16,948 15,287 10.9% Shareholders Equity 1,899 2,010-5.5% Risk-Weighted Assets 15,153 12,734 19.0% Tier 1 Capital 1,779 1,934-8.0% * excl. settlement balances 35
Summary of financial results amounts in million 2002 2001 % change Net Interest Income 721 614 17.4% Net Fee & Commission Income 250 247 1.2% Core Operating Income 972 862 12.8% Total Operating Income 1005 944 6.6% Operating Expenses 611 548 11.5% Provisions 98 68 44.1% Core Operating Profit 263 246 6.9% Profit after tax & minorities 184 206-10.7% 36
Key ratios Key Ratios 2002 2001 Loans to Deposits (excl. SB) 78.7% 71.6% Loans to ATA (excl. SB) 52.7% 55.8% Provisions to average total loans (excl SB) 0.8% 0.7% Tier 1 ratio 11.7% 15.2% Net Interest Margin 3.2% 3.3% NII & Commissions to total operating income 96.7% 91.3% Cost to average assets 2.7% 3.0% Cost to income 60.8% 58.1% Pre-tax ROA 1.2% 1.8% After-tax ROA 0.8% 1.2% Pre-tax ROE 14.1% 16.6% After-tax ROE 9.4% 10.6% 37
Outperformed Greek Banks again in 2002 Greek Banks vs the Banking Index 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 38 December-01 January-02 February-02 March-02 April-02 May-02 June-02 July-02 August-02 September-02 October-02 November-02 December-02 BANKING INDEX EFG NBG CBG ALPHA
Investor Relations Contacts EFG Eurobank Ergasias, 8 Othonos Str., 10557 Athens, Greece Fax: +30 210 3337150 E-mail: investor_relations@eurobank.gr Internet: www.eurobank.gr Reuters: EFGr.AT Bloomberg: EUROB GA Investor Relations Yannis Tegopoulos Tel: +30 210 3371222 Marlen Miliadi Tel: + 30 210 3371469 Yannis Chalaris Tel: +30 210 3337954 E-mail: itegopoulos@eurobank.gr E-mail: mmiliadi@eurobank.gr E-mail: ychalaris@eurobank.gr 39