EFG Eurobank Ergasias increased first-quarter net profit 49.6 percent, sharply above consensus, by expanding retail lending and containing costs, Greece’s third-largest lender by assets announced yesterday.

EFG Eurobank’s announcement concluded the first-quarter reports of the “big five” banking groups, the others being National, Alpha, Emporiki and Piraeus banks. With the exception of Emporiki, whose profits took a 52 percent dive due to higher provisions for non-performing loans and higher operating costs, all other banks posted profit rises that exceeded market expectations, showing that the recovery began in 2003 is being consolidated.

Reporting under Greek accounting standards, the group said consolidated profit after taxes and minorities rose to 88.2 million euros. Market analysts had forecast a nearly 30 percent rise, to about 75 million euros, while the bank’s management is aiming for an overall profit rise of 14 percent this year and next, as well as a 20 percent rise in profits per share.

The bank said total loans, including those by its Balkan subsidiaries with the exception of Post Bank in Bulgaria, rose 25 percent to 17.8 billion euros. Consumer loans were up 32 percent and home loans up 35 percent. Corporate loans rose 19 percent.

Expanded lending boosted net interest income by 14.7 percent to 234 million euros, also above forecasts, contributing 67 percent to overall operating income.

The bank’s net interest margin stayed above 3.0 percent, “reflecting the profitable loan mix,” it said. Its ratio of non-performing loans improved to 3.2 percent from 3.3 percent at the end of last year.

Growth in asset management, investment banking and insurance activities also boosted net commission income by 28 percent to 84 million euros, the bank said.

On the expense side, EFG Eurobank contained operating costs in Greece to 3.8 percent, with its cost-to-income ratio “falling for the first time below 50 to 47.9 percent,” it said. On a consolidated basis, the cost-to-income ratio stood at 50.2 percent at the end of March, from 57.3 percent at end-March 2003.

"First-quarter performance confirms the group is in the right direction to achieve management’s goal of earnings per share (EPS) growth above 20 percent in 2004 and 2005," the bank said.

Its shares, up 13 percent since the start of the year, closed 0.99 percent higher at 18.36 euros.