The National Bank of Greece (NBG), the country’s largest, yesterday reported a 38.4 percent improvement in nine-month profit, despite a slide in the third quarter. NBG group pretax earnings after minorities grew to 382.5 million euros year-on-year, on the back of improved core operating revenue and a lid on personnel and administrative expenses. NBG said that at the end of the third quarter, total retail lending – mortgages, credit cards, consumer credit and loans to the self-employed – exceeded corporate lending for the first time in the bank’s history. Third-quarter pretax profit after minorities fell about 18 percent quarter-on-quarter to 121.9 million euros, mainly due to a decline in trading income. Net interest income in the nine months reached 960.6 million euros, 9.5 percent higher year-on-year from 876.9 million. Despite the European Central Bank’s rate cut by 50 basis points (bps) in June, the group’s net interest margin in the third quarter stayed at its highest point for the last three years, achieved in the first half, at 263 bps, compared to 243 bps for the whole of 2002. NBG noted a significant acceleration in the growth rate of net commission income, which advanced 14.9 percent year-on-year to 285.7 million euros, and 8 percent quarter-to-quarter, compared to a 7.9 percent rise in the first half. The development reflects the expansion mainly in retail operations, NBG said. The growth of operating expenses was restricted to 0.5 percent, with payroll expenses remaining on a par with last year’s levels, at 541.8 million euros. As a result, the group’s efficiency indicator improved to 66.5 percent from 71.7 percent for all of 2002. Total lending in the first nine months of the year reached 21.9 billion euros, up 9.5 percent from the end of 2002. Total consumer lending (credit cards and loans) grew at an annualized rate of 22.5 percent and mortgages at 18.5 percent, while new consumer lending climbed 27.5 percent to about 700 million euros and new mortgages 29 percent higher to nearly 1,200 million euros. Loans to the self-employed were 50 percent higher, with total balances exceeding 700 million euros, while lending to small and medium-sized enterprises (SMEs) was 19 percent higher from the end of 2002. NBG also noted an improvement in the quality of its lending portfolio, with loans in arrears now representing 6.5 percent of the total, from 7.0 percent nine months earlier. Total funds under management stood 6.6 percent higher at the end of September, at 47 billion euros. Demand deposits and savings were 2.8 percent higher than the beginning of the year, while a 7.3 percent drop in term deposits and repos was fully offset by a 72 percent rise in the group’s mutual fund assets, whose market share rose to 24.2 percent at the end of September from 16.7 percent a year earlier. The NBG group’s basic capital adequacy index (Tier I) is estimated at 9.7 percent, while the total capital adequacy index (Tier II) is estimated at 12.9 percent, compared to 10.4 percent at the end of 2002. NBG’s foreign network accounted for a significant 23 percent of the group’s nine-month earnings after minorities, or 89 million euros. The group’s after-tax return on average on equity is estimated at 14.0 percent against 8.7 percent in 2002, while the pretax return has improved from 14.3 percent to 20 percent.