Banks’ first-half results have confirmed their forecasts for an improvement this year. As a whole, Greece’s credit institutions continue to focus on their core earnings performance, but have also shown a significant recovery in trading income for the first time since the crash of the Athens Stock Exchange (ASE) several years ago. One could, indeed, say that ASE’s bear market, even though it caused bank profits to fall or stagnate, ultimately had a positive effect by spurring them to restructure and develop core activities further. The four largest banks that have announced first-half results, National, Alpha, EFG Eurobank and Emporiki, but also the two smaller ones, Attica and General, all gave a positive picture; in particular, General Bank, which reported losses for 2002, on Monday posted a 103.9 percent recovery in first-half results The National Bank Group (NBG) said net pretax earnings rose 14 percent to 260.6 million euros year on year, while Alpha’s net income after tax and minorities surged 62.3 percent to 118.3 million. EFG Eurobank net profit after tax and minorities was up 11.5 percent to 129 million, while Emporiki’s net earnings before tax and after minorities rose 31 percent to 56.21 million euros. The percentage improvements do not provide fully indicative data, as a large increase is mainly due to last year’s low starting base, but it nevertheless depicts banks’ ability to recover. The analysis of profitability according to source is more revealing, showing qualitative differences and the potential for growth of core banking operations on which a series of other indicators depend, such as staff productivity and efficiency. Net interest income also showed an upward trend in the first half, mainly as a result of increased lending, but the net interest margin (the ratio of net interest income to average assets) appears lower than 3 percent in National and Alpha. Lending grows The results of the big four all clearly reflect efforts to boost retail lending, including personal, consumer and housing credit. National reported a 10 percent growth in total lending to 21.4 billion euros, but noted that new consumer credit rose 24 percent and mortgages 16 percent year on year. Alpha said total lending was up 17.4 percent to 19.2 billion euros, while retail credit shot up 46.8 percent. However, it did not provide analytical data on mortgage and consumer credit. In its statement, the bank acknowledged that the mortgages had grown at a slower pace, but it was keen to stress its emphasis on (and advertising for) lending to small and medium-sized enterprises, particularly the facility which provides for a 10 percent return of interest to punctual customers. It said it has granted about 7,500 such loans since September, totaling 120 million euros. EFG Eurobank said total lending grew 21.8 percent to 14.5 billion euros. Retail lending rose 30 percent to 5.7 billion. The bank has recorded growing market shares in mortgage and consumer lending over the last two years; consumer credit surged 32 percent to 3.1 billion euros in the first half, while mortgages grew 27 percent to 2.5 billion. Emporiki’s lending grew 21 percent to 11 billion euros. The outstanding balances of mortgages stood at 2.26 billion euros at the end of June against 1.71 billion a year earlier, representing 20.5 percent of the total outstanding lending balance. Outstanding balances of consumer loans stood at 809 million euros at the end of the first half, or 20.4 percent higher than a year earlier. Apart from NBG, which reported a 16.6 percent decline, all other banks posted a rise in first-half trading income. Alpha said this grew an impressive 115.3 percent to 64.4 million euros. EFG Eurobank reported a 19 percent rise in total non-core earnings to 21 million euros, year on year. Finally, Emporiki reported a profit of 3.8 million euros from trading activities, compared to a loss of 4 million last year. All banks generally reported satisfactory results from efforts to contain operating costs and improved indices of return on equity and capital employed. The analysis of results shows the particular strengths and weaknesses of each bank, which will no doubt have a bearing on the projected new round of restructuring deals in the sector.