National Bank of Greece (NBG), the country’s largest in terms of assets and with a market capitalization of 4.52 billion euros, yesterday announced first-half group pretax earnings after minorities of 260.6 million euros, up 14 percent compared to the same period last year. Analysts in a Reuters poll had forecast a modest 3.1 percent rise in first-half pretax earnings. The bank said in a press release that the improvement was due to an expansion of core activities, particularly in the domains of retail banking and lending to small and medium-sized enterprises. The momentum of a rising profitability trend was demonstrated by a 33 percent rise in second-quarter earnings compared to the previous quarter to 148.6 million euros, NBG said. Net interest income reached 640.8 million euros, 12.8 percent higher year-on-year. The group’s net interest margin reached the highest point for the last three years, at 263 basis points (bps), compared to 235 bps a year earlier and 243 bps for the whole of 2002. Group net commission income in the first half advanced 11.5 percent year-on-year to 199.2 million euros, and was 16.8 percent higher in the second quarter compared to the first. Total lending in the first six months of the year reached 21.4 billion euros, a rise of 10 percent year-on-year. New consumer loans climbed 24 percent from a year earlier, while the outstanding balances of consumer loans and card credit stood 18 percent higher from end-June 2002. Similarly, new mortgages registered an increase of 25 percent, while the total balance of mortgages was 16 percent higher. Corporate lending rose 8 percent in relation to the end of 2002. Non-performing loans represented 1.7 percent of total portfolio compared to 2.0 percent six months earlier. Mutual fund placements grow NBG said that despite the de-escalation of interest rates, the total of demand deposits and savings rose 1 percent from the end of 2002. In the framework of the bank’s policy to offer alternative forms of investment products, the fall of 1.1 billion euros, or 8.9 percent, in placements on term deposits and repos in the first six months was offset by a twice-as-large increase of 2.2 billion euros in the group’s mutual fund assets, representing a climb of 51.6 percent. This led to an enlargement in the group’s mutual fund market share from 16.7 percent at the end of 2002 to 22 percent at the end of June 2003. As a result the total of savings (deposits, repos and mutual funds) was up 3.1 percent to 45.4 billion euros compared to the end of last year. NBG’s foreign network accounted for a significant 23 percent of the group’s first-half earnings after minorities, or 59.7 million euros. Operating expenses rose marginally (0.5 percent) in relation to the first half of 2002 but fell 0.2 percent between the first and second quarters this year. The 1.9 percent fall in payroll expenses in the first half was due to a 5.6 percent reduction in the staff of group subsidiaries abroad. A systematic restriction of cost factors led to a further improvement in the group’s efficiency indicator to 65.5 percent from 70.7 percent in the first half of 2002 and 71.7 percent for the whole of 2002, NBG said. The group’s return on equity improved from 14.3 percent in 2002 to 20.6 percent.