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Business Report 2016

A new day for the world. Scheduled to last 24 hours, destined to be the day after yesterday, the day before tomorrow. Rising with new light, new colours. And a new century for Piraeus Bank. One hundred years of such new days, successive beginnings every 24 hours, whose colours set the tone and chart a course that is steady, a bright course - almost dazzling.And tomorrow, we will be here again, full of admiration for whatever dawns, ready to start the next day, the next future.

Contents

13 Historical Course

17 Vision and Values

18 At a Glance

29 Chairman’s Letter to the Shareholders

37 Group’s Financial Data Analysis

45 Economy Developments

47 Market Review

50 Targets and Outlook

57 Operations in Greece

95 International Operations

105 Technology, Organization and Central Operations

131 Risk Management

Business Report 13

1916-1975 The early years• 1916: founding of Piraeus Bank.• 1918: listing of Piraeus Bank shares on the Athens Stock Exchange (ATHEX).• 1963: Piraeus Bank is integrated in the Group of Emporiki Bank of Greece.• 1975: Piraeus Bank, as part of Emporiki Group, comes under state control.

1991-1999 Growth and creation of "critical mass"• 1991: privatisation of Piraeus Bank.• 1992: reorganisation, rationalization and growth.• 1993: establishment of Piraeus Leasing, Piraeus Mutual Funds and Piraeus Insurance Agency.• 1996: founding of Tirana Bank in Albania.• 1997:absorptionofassetsandliabilitiesofChaseManhattanBankinAthens.Acquisition

of30%ofSigmaSecuritieswithanagreementforthefutureacquisitionofanadditional21%;Acquisitioncompletedin1998.

• 1998:acquisitionofMacedonia-ThraceBank.AcquisitionofCreditLyonnaisHellas.AgreementfortheacquisitionofamajoritystakeinXiosbank(dealcompletedinthebeginningof1999).Agreementfortheacquisitionofa56%stakeinMarathonNationalBankofNewYork(dealcompletedinmid-1999).

• 1999:absorptionofassetsandliabilitiesofNationalWestminsterBankinGreece.Operational and administrative integration of the three commercial banks of the Group (PiraeusBank,Macedonia-ThraceBankandXiosbank).AcquisitionagreementforPaterCredit Bank in Romania (integrated in the Group in April 2000, as Piraeus Bank Romania). Establishment of London Branch.

Historical Course

14 Business Report

2000-2003

Integration of IT systems and processes• 2000: completion of merger by absorption of Xiosbank and Macedonia-Thrace by Piraeus

Bank.Creationofwinbank,thefirstintegratede-bankingplatforminGreece.• 2001: completion of reorganisation of asset management and investment banking

sectors, with merger of similar mutual funds, and absorption of Xios Securities and Macedonia-ThraceSecuritiesbySigmaSecuritiesSA.AgreementfortheacquisitionofETVAbank. Extension of the Group’s market shares in banking, leasing and third-party wealth management.

• 2002:completionofa57.8%acquisitionofETVAbank.• 2003: merger by absorption of ETVAbank by Piraeus Bank, of Piraeus Investment SA by

Hellenic Investment Company and of ETVA Leasing by Piraeus Leasing SA.

2004-2008

Strong domestic presence and international expansion• 2004: merger by absorption of Devletoglou Securities SA by Sigma Securities SA, and of

ETVA Insurance Agency by Piraeus Insurance Agency. • 2005:acquisitionof99.7%ofBulgarianPiraeusEurobankAD(renamedPiraeusBank

BulgariaAD).Acquisitionof80%ofSerbianPiraeusAtlasBankaAD(renamedPiraeusBankBeogradAD).Acquisitionof69.3%ofEgyptianCommercialBank(renamedPiraeusBank Egypt).

• 2006: merger and operational integration of Piraeus Bank branch network in Bulgaria with Piraeus Bank Bulgaria.

• 2007:acquisitionofInternationalCommerceBankinUkraine(renamedJSCPiraeusBankICB).AcquisitionofArabBank’sbranchnetworkinCyprus.RenewalofthecooperationwiththeinternationalINGGroupinthefieldofbancassuranceinGreece.Completionofthe Bank’s Share Capital Increase by €1.35 bn.

• 2008: establishment of Piraeus Bank Cyprus Ltd.

2009-2011

Responding to the first phase of the financial crisis• 2009: issuance of non-voting preferred shares, to the amount of €370 mn, in favour of

the Hellenic Republic, pursuant to Greek Law 3723/2008 (L. 3723/2008). Agreement with Victoria General Insurance Company SA, subsidiary of ERGO International in Greece and member of the Munich Re Group, for the implementation of a ten-year exclusive cooperationinthegeneralinsurancefield.

• 2010: creation of winbank Direct (www.winbankdirect.gr),thefirstonlinechannelforthedelivery of banking services in Greece.

• 2011: completion of a Share Capital Increase of €0.8 bn. Issuance of additional non-voting preferred shares, to the amount of €380 mn, in favour of the Greek State, pursuant to L. 3723/2008. Participation in the PSI programme with total eligible bonds amounting to €7.7 bn; thetotalimpairmentrecognizedinthefinancialyear2011amountedto€5.9bnbeforetaxes.

Business Report 15

2012-2015

Safeguarding the balance sheet and participation in the consolidation of the sector • 2012:acquisitionofthe"healthy" part (selected assets and liabilities) of ATEbank, which

wasplacedunderspecialliquidationatthetime.Saleoftheparticipation(98.8%)inMarathonBankingCorporation.AcquisitionofthetotalparticipationofSocieteGenerale(99.1%) in Geniki Bank. Participation in the Greek Government Bond (GGBs) Buyback Programme for the reduction of public debt.

• 2013:acquisitionofdeposits,loans,branchesandemployeesinGreeceofBankofCyprus, Cyprus Popular Bank and Hellenic Bank. Agreement for the sale of Piraeus Bank’s stake (93.72%) in the share capital of ATEbank Romania SA. Agreement with Millennium BCPfortheacquisitionofthecapitalshareofMillenniumBankGreeceSA.Sharecapitalincrease of €8,429 bn. Integration of the information systems of former ATEbank, Hellenic Bank, Bank of Cyprus and Cyprus Popular Bank in the uniform IT environment of Piraeus Bank. Legal merger and integration of IT systems of Millennium Bank Greece SA, completingtheintegrationofallbankingactivitiesthatwereacquiredbyPiraeusBank,with the exception of Geniki Bank.

• 2014: issuance and placement of €0.5 bn three-year senior bonds in the international markets,inordertoobtainmedium-termliquidity.Sharecapitalincreaseof€1.75bn.Redemption of Greek State’s Preferred shares in the amount of €750 mn (L.723/2008). ApprovalofthemergerofPiraeusBankwithGenikiBankSA,byacquisitionofthelatterby the former and completion of the Geniki Bank’s systems integration in the uniform IT environment of Piraeus Bank Group.

• 2015: acquisitionofthe"healthy" part of Panellinia Bank SA. The integration of its systems wascompletedinJuly2015.

• Return to the Public Debt Management Agency (PDMA) of the sum of special bonds issued to the Bank within the framework of Pillar III of L. 3723/2008, with a total nominal value of €2.2 bn.

• Liability Management Exercise (LME) involving the exchange of securities for cash or shares (or any combination thereof) in respect of the senior unsecured bonds and preferredsecuritiesof€500mnwithafixedinterestratematuringin2017,of€400mnwithafloatinginterestratematuringin2016andof€200mnwithafloatinginterestrateandindefiniteduration.TheLMEwasconductedinordertostrengthentheBank’scapitalbase. The bond holder general meetings approved the exchange for all the securities.

• ECB Banking Supervision conducted a comprehensive assessment of the four Greek systemic banks.

• Agreement for sale of its stake in the subsidiary Piraeus Bank Egypt SAE.• Completionofthebook-buildingprocessregardingtheofferingofnew common shares

in cash amounting to €1.34 bn. • The Bank’s revised Restructuring Plan was approved by the European Commission. • Completion of raising funds to the amount of €4.7 bn, with a share capital increase with

cash, capitalisation of liabilities via cash payments and contribution in kind of ESM bonds, and issuance of contingent convertible bonds (CoCos) that were covered solely by the Hellenic Financial Stability Fund (HFSF).

16 Business Report

2016

• The Single Resolution Mechanism (SRM) for Eurozone banks, to whose supervisory jurisdictionPiraeusBankfallsunder,becamefullyoperational.

• Piraeus Bank’s last remaining guarantees of the Hellenic Republic (Pillar II), issued under theframeworkofL.3723/2008,usedforliquiditypurposes,wereredeemed.PiraeusBank had already repaid the Preferred Shares (Pillar I) held by the Government in the Bank's share capital in May 2014, while it returned the "Special Bonds" (Pillar III) to the GovernmentinSeptember2015.UponredemptionofPillarIIbonds,PiraeusBanknolonger had any reliance on the measures of L. 3723/2008, and therefore was no longer subjecttotherestrictionsofthesupportscheme,which,amongothers,required the appointment of a Greek State representative on its Board of Directors (BoD).

• Announcement by Piraeus Bank regarding agreement for the sale of shares in its subsidiary in Cyprus, Piraeus Bank Cyprus Ltd (PBC) for a consideration of €3.2 mn.

• DecisionbytheformerNon-ExecutiveChairmanofPiraeusBank,Mr.MichalisSallasnot to participate in the new BoD of Piraeus Bank. Mr. Sallas was awarded the title of Chairman Emeritus of Piraeus Group, after unanimous resolution of the BoD. Following the resignation of Mr. Michalis Sallas, the BoD of Piraeus Bank elected Professor MrsCharikleiaApalagaki,asinterimChairman.InNovembertheBoDelected MrGeorgeHandjinicolaouasnew Chairman.

• Announcement by Piraeus Bank regarding the transfer of 100% of the share capital of ATEInsurancetoErgoInternationalAG,asubsidiaryofMunichRe,followingthefulfilmentof all the conditions under the relevant agreement.

• Attheendof2016,PiraeusBankwasthefirstbanktolaunchintotheGreekmarket a newmodelofafullyautomatede-branchofferingarangeoffull-servicebankingtransactions.

Business Report 17

Vision and Values

PiraeusBankdefinesitsvisiontakingfullyintoaccountwhereitistoday:inthefirstplace.

With the trust of its customers, Piraeus Bank will contribute to the restart of the domestic economy, offering innovative banking solutions to customers, while at the same time operating effectively and using its supervisory capital prudently. Piraeus Bank Group sets out targets with a sustainable outlook, promotes innovative and sustainable entrepreneurship, guides its people with integrity, empowering them with continuous training, provides high quality service to its customers, ensures transparency and builds relations of trust in all its operations.

The vision of Piraeus Bank is to be the most trusted Bank in Greece, creating value for its shareholders, its customers and its employees. The Bank's values include customer focus, management accountability, performance driven culture and business sustainability.

18 Business Report

At a Glance

• Market leader in Greek banking market, and active in 7 other countries, 4 of which aremembersoftheEuropeanUnion.

• 921 branches1, 660 in Greece and 261 abroad.• 18,075 employees1, 14,492 in Greece and 3,583 abroad, young in age (41 years old

istheaverage),familiarwithtechnology,fully-trained,flexibleregardingtheadoption of new methods and practices.

• Pioneer in supporting agricultural and green entrepreneurship.• Pioneer in environmentally-friendly and user-friendly electronic banking through its

winbank web-banking platform.• 5.6mncustomers1 in Greece and the other countries it operates in.• Constantly among the top-ranking banks in Greece, regarding customer satisfaction

and loyalty.• Contributiontosociety,cultureandenvironmentthroughasystematicanddefined

framework of actions and initiatives.

1 Data as at 31.12.2016.

2013

92.0

89.387.9

81.5

2014 2015 2016

Group Total Assets (€ bn)*

* The evolution of volumes incorporates divestment of operations, in accordance with the approved Restructuring Plan of Piraeus Bank.

2013

62.4

57.1

50.649.7

2014 2015 2016

* The evolution of volumes incorporates divestment of operations, in accordance with the approved Restructuring Plan of Piraeus Bank.

Group Net Loans (€ bn)*

2013

54.3 54.8

39.4

42.4

2014 2015 2016

* The evolution of volumes incorporates divestment of operations, in accordance with the approved Restructuring Plan of Piraeus Bank.

Group Deposits (€ bn)*

2013

54.3 54.8

39.4

42.4

2014 2015 2016

* The evolution of volumes incorporates divestment of operations, in accordance with the approved Restructuring Plan of Piraeus Bank.

Group Deposits (€ bn)*

2013 2014 2015 2016

0.9

1.0

0.9

1.0

Group Pre – Provision Profit (€ bn)

2013 2014 2015 2016

36.6%

38.8%

40.1%

37.5%

* NPL ratio does not include the seasonal agri–loan facility to OPEKEPE.

Group NPL ratio*

2013 2014 2015 2016

0.9

1.0

0.9

1.0

Group Pre – Provision Profit (€ bn)

2013 2014 2015 2016

1.5

1.4

1.5

1.3

Group Operating Costs (€ bn)

20141,175

2015989

2016921

20131,449Total

412

1,037

372

280

261

803

709

660

Group Branch Network*

* The evolution of the branch network incorporates divestment of operations, in accordance with the approved Restructuring Plan of Piraeus Bank.

International OperationsGreece

201421,243

201519,279

201618,075

201322,509

5,952

16,558

15,539 15,599

14,492

5,705

3,680

3,583

Total

Group Human Resources*

* The evolution of the number of employees incorporates divestment of operations, in accordance with the approved Restructuring Plan of Piraeus Bank.

International OperationsGreece

2014 2015 20162013

13.9%

12.0%

17.0% 17.0%

Group Common Equity Tier-1

Business Report 29

2016 was marked by a series of positive developments for the Greek economy, such as the successful conclusion of the first review for the third Economic Adjustment Programme, the further relaxation of capital controls, the reinstate-ment of the waiver for Greek Government Bonds (GGBs), i.e. making GGBs once again eligible as collateral for ECB monetary policy operations, and the short-term debt relief measures for Greece announced at the end of the year. Even though developments had a positive impact on limiting uncertainty and improving the economic sentiment, the economy failed to regain its momentum and return to positive growth. In 2016, the Greek GDP remained relatively stable, following a recession of -0.3% in 2015, based on seasonally adjusted data. In the second and third quarters of the year, GDP grew with positive rates, but in the fourth quarter recorded a negative quarterly change of -1.1%. Overall, in 2016 domestic demand had a positive contribution, mainly due to the increase in private consumption, whereas the contribution of international trade was negative. In the first quarter of 2017, real GDP grew by 0.4% both on an annual and a quarterly basis. Meanwhile, in 2016 inflation remained in negative territory, albeit its deflating trend following a slower pace (2016: -0.8%, 2015: -1.7%). However, in December 2016 Greece emerged from 45 months of deflation, turning to a zero inflation rate annually. The unemployment rate stood at 23.5% in 2016 versus 24.9% in 2015, as employment increased by 1.7% and the number of unemployed decreased -5.5%. In 2016, the current account balance posted a deficit of -€1.1 bn (-0.6% of GDP), compared to a surplus of around €0.2 bn (0.1% of GDP) in 2015. In the first quarter of 2017, the current account deficit widened by €160 mn compared to the corresponding quarter of 2016 and stood at -€2.5 bn. In 2016, tourism revenues were down 6%, a decline that was attributed to the reduction in average expenditure per trip by 11%, since the number of arrivals from abroad posted a 5% increase. On a fiscal level, 2016 had a positive performing. The general government balance (excluding the impact of finan-cial institutions support) showed a 0.7% of GDP surplus in 2016, against a deficit of -3.2% of GDP in 2015, while the corresponding primary surplus reached 3.9% versus 0.4% in 2015. At the end of 2016, the Economic Sentiment Index (ESI) stood at 91.8 points, compared to 89.7 points in 2015. However, the protracted negotiations for the conclusion of the second programme review led to a renewed height-ened uncertainty and to the decline of the ESI during the beginning of 2017. Therefore, critical parameters to the path towards economic recovery in 2017, at macroeconomic and fiscal level, remain the conclusion of the second programme review, the timely disbursement of the programme instalments for debt repayment and for the reimbursement of state arrears to private sector suppliers and the implementation of debt relief measures.

Chairman’s Letter to the Shareholders

30 Business Report

The Greek banking system, following the successful recapitalization at the end of 2015, has formed significant buffers of additional capital that shielded the Greek banks' balance sheets, despite the prevailing conditions in the domestic economy. Addressing the high level of non-performing loans represents the biggest challenge for the Greek banking system. In late November 2016, the Bank of Greece (BoG) in cooperation with the Single Supervisory Mechanism (SSM) of the European Central Bank (ECB) set operational targets for the reduction of non-performing exposures (NPEs) of Greek banks, which are accompanied by key performance indicators. Quarterly operational targets were set from June 2016 up until the end of 2017 and annual targets for 2018 and 2019. These operational targets have been incorporated in the banks’ business plans. Within this framework, the sector is estimated to reduce its NPEs by approximately -38%, from approximately €107 bn in September 2016 to approximately €67 bn by the end of 2019. The downward trend in NPEs was evident during the first two quarters of implementing the operational targets (third and fourth quarters of 2016). This reduction was achieved mainly due to the implementation of effective re-structuring arrangements, which reinstated exposures in arrears to normal servicing status, and due to the write-offs of non-recoverable exposures. With respect to loans in the Greek banking market, the annual adjusted reduction rate of domestic retail sector financing in December 2016 stood at -1.5% (€195 bn) from -2.0% in 2015. The loans to deposits ratio for the Greek banking market improved to 120% in December 2016 from 128% in December 2015. Deposits in the domestic market (private and public sector on a comparable basis) increased 4% and amounted to €139 bn. The Greek banking system’s total reliance on the Eurosystem was limited in December 2016 to €67 bn, from €108 bn a year earlier, of which €44 bn were covered through the Emergency Liquidity Assistance (ELA) mechanism (-€25 bn year-on-year) and €23 bn from ECB refinancing (-€16 bn year-on-year). On 22.6.2016, the ECB Governing Council decided to reinstate the waiver for GGBs, i.e. making GGBs once again eligible as collateral for ECB monetary policy operations. The suspension entered into force on 29.6.2016. Greek banks participated in the ECB’s Targeted Longer-Term Refinancing Operations II programme (TLTROs), which was launched on 10.3.2016, conditional on the existence of eligible collateral. The TLTRO II programme has a four-year maturity, with the possibility to participate on four different dates, the first of which was in June 2016 and the final one in March 2017. In addition, a significant development that occurred in 2016, was the fact that the European Financial Stability Facility (EFSF) has allowed Greek banks, which had received its notes as part of their recapitalization and the consoli-dation of the industry during the previous years, to sell the notes under ECB’s Quantitative Easing programme (QE). Taking into account the implementation of the Economic Adjustment Programme and the gradual relaxation of capital controls since the end of July 2016, and the prospect of the completion of the second programme review, it is estimated that Greek banks are in a position to gradually improve their funding profile and strengthen their deposit base, as long as the second review negotiations are completed swiftly and successfully. The most important corporate events for Piraeus Bank Group during 2016 were the following:

• Moody’s upgraded the credit rating of the senior debt of Piraeus Bank to "Ca" with a stable outlook from "C",andaffirmedthecreditratingofitsdepositsto"Caa3", changing the outlook to stable from negative. S&P Global Ratings upgraded the credit rating of Piraeus Bank to "CCC+" with Stable outlook from "SD" previously.

• Following EFSF’s decision in April 2016, Greek banks that had previously received EFSF notes for their recapitalisation and/or the consolidation of the banking sector, were able to participate in the Quantitative Easing programme (QE) established by the ECB, bysellingtherespectivenotes.Upto31.12.2016PiraeusBankhadsoldEFSFnoteswith a nominal value of €3.7 bn within the framework of the QE programme.

• Piraeus Bank’s last remaining guarantees of the Hellenic Republic (Pillar II), issued undertheframeworkofL.3723/2008,usedforliquiditypurposeswereredeemed.Piraeus Bank had already repaid the Preference Shares (Pillar I) held by the Government in the Bank's share capital in May 2014, and had returned the "Special Bonds" (Pillar

Business Report 31

III)totheGovernmentinSeptember2015.UponredemptionofPillarIIbonds,PiraeusBank no longer had any reliance on the measures of L. 3723/2008, and therefore was nolongersubjecttotherestrictionsofthesupportscheme,which,amongothers,requiredtheappointmentofaGreekStaterepresentativeonitsBoD,aswasthecaseduring the last seven years. Piraeus Bank has fully repaid all the Pillars of L. 3723/2008, withoutanylosstotheGreekStateastotheguaranteesandcapitalitoffered,while the Greek State has earned approximately €675 mn in fees from Pillars II & III.

• PiraeusBanksoldits28.7%equitystakeinthesharecapitalofEuropeanRelianceGeneral Insurance Co. SA, following its successful recapitalization in December 2015. The transaction was carried out as part of the Bank’s disposal of non-core assets as prescribed in its Restructuring Plan.

• In the context of implementing its Restructuring Plan, Piraeus Bank entered into an agreementwithWertRedS. .r.l., a Luxembourg-based company, wholly owned by V rde Partners, for the sale of 18,551,880 shares in its subsidiary Trastor REIC.

• TheECB’sdecisionon22.6.2016toreinstatethewaiveraffectingtheeligibilityofmarketable instruments issued or fully guaranteed by the Hellenic Republic as collateral forthesupplyofliquiditysubjecttospecialhaircuts,resultedinthereductionofPiraeusBank’s funding from the ELA mechanism by approximately €1 bn.

• Piraeus Bank entered into an agreement for the sale of shares in its subsidiary in Cyprus, Piraeus Bank Cyprus Ltd (PBC) for a consideration of €3.2 mn. This, in combination with a concurrent share capital increase by PBC of €40 mn, which was fully-subscribed by private investors resulted in the reduction of Piraeus Banks’ participation in PBC’s share capital to 17.7%.

• Piraeus Bank completed the agreement for the sale of 100% of the share capital of ATE Insurance to Ergo International AG - a subsidiary of Munich Re. ERGO International AG paid a consideration of €90.1 mn in cash for the total stake of Piraeus Bank in ATE Insurance’s share capital.

• The results of the Asset Quality Review (AQR) and of the Stress Test which were carried outbytheBulgarianNationalBank(BNB)wereannounced.Theresultsshowed that Piraeus Bank Bulgaria, a subsidiary of Piraeus Bank, is very well capitalized even under the adverse scenario of the exercise.

• Piraeus Bank announced that it is exploring strategic alternatives regarding its participation in the share capital of its subsidiary "Olympic Commercial and Tourism Enterprises SA", including a potential sale of its stake, a process still in progress.

The first quarter of 2017 is undoubtedly a period of uncertainty for the domestic economic and banking environ-ment. The projected reforms defined in Greece's Economic Adjustment Programme are expected to accelerate the recovery and restructuring of the economy, while most international organizations and agencies estimate a positive GDP growth rate in 2017, though lower than the initial estimate of growth above 2%. A prerequisite is the successful conclusion of the second review of the Economic Adjustment Programme, which is expected to have a significant positive impact on restoring confidence in the Greek economy. In the context of its business planning, Piraeus Bank focuses on all the possibilities and opportunities for recovery. Key issues for 2017 remain: a) improving asset quality through the consistent implementation of active NPL manage-ment and the use of new solutions legislated in 2016 or expected to be legislated in 2017, so as to honour its com-mitments to ECB, b) improving liquidity through the gradual return of deposits, and the reduction in ELA funding, and c) returning to profitability, through the continuous improvement of sources of revenue and of operational efficiency.

32 Business Report

Furthermore, the further deleveraging mainly of foreign assets is expected to continue, in accordance with the com-mitments depicted in Piraeus Bank's Restructuring Plan. Finally, the appointment process of the Bank’s new CEO was concluded at the beginning of March 2017, with the election of Mr. Christos Megalou, marking a major step towards the formation of a strong BoD, with the expertise, the experience and the determination to successfully address current challenges and ensure that the Bank can successfully confront the operating and corporate governance challenges, as stipulated by best international practices and ECB’s recommendations.

George HandjinicolaouChairman of the Board of Directors

Business Report 37

Group’sFinancial DataAnalysis

Volumes EvolutionAt the end of December 2016, the Group’s total assets amounted to €81,501 mn down from €87,934 mn in December 2015. The Group’s gross loans before adjustments at the end of December 2016 amounted to €66,648 mn, including the disbursement of a seasonal agri-loan facility of €1.7 bn to OPEKEPE (Greek Payment and Control Agency for Guidance and Guarantee Community Aid) for the payment of EU agricultural subsidies to approximately 700 thousand Greek farm-ers, which was repaid in full in the beginning of 2017. Total loans in Greece were €62,998 mn and loans from international operations amounted to €3,650 mn. Following the great decline in the Group’s total deposits in 2015 due to the uncertainty about Greece, there was a gradual increase during the second half of 2016. At the end of December 2016, Group deposits amounted to €42,365 mn, with the in-crease stemming mainly from Greece, where deposits increased to €39,322 mn. Piraeus Bank’s Group reliance on the Eurosystem declined in 2016, ending at €20.9 bn in December 2016, down from €32.7 bn by the end of 2015. Financing through the ELA was reduced to €11.9 bn at the end of 2016 from €16.7 bn at the end of 2015. In addition, access to the interbank Repo market improved in 2016, with a balance of €5.9 bn at the end of December 2016 versus €1.7 bn a year earlier. Regarding the Group’s loans breakdown by customer at year-end 2016, the total business portfolio amounted to €44,213 mn, with retail loans amounting to €22,435 mn. Business loans represent 66% of total Group loans, with retail loans at 34% (24% for mortgages and 10% for consumer loans). Based on December 2016 data, Piraeus Bank holds the first position in the Greek banking sector, with a 30% market share in terms of loans. Net loans amounted to €49,708 mn, with Piraeus Group’s loan to deposits ratio in December 2016 having improved to 117% at December 2016 from 129% at year-end 2015.

Loans to Businesses 44,213 44,525 -1%

Retail Loans 22,435 23,546 -5%

Total Loans 66,648 68,071 -2%

Greece 62,998 63,922 -1%

International Operations 3,650 4,149 -12%

Gross Loans per Category

31.12.2016Amounts in €mn 31.12.2015 Change

38 Business Report

Sights – Savings 26,186 24,780 6%

Time 16,179 14,577 11%

Total Deposits 42,365 39,358 8%

Greece 39,322 36,547 8%

International Operations 3,043 2,810 8%

Deposits per Category

31.12.2016Amounts in €mn 31.12.2015 Change

Loan Portofolio QualityThe Group’s NPLs ratio decreased to 37.5% (or 36.6% including OPEKEPE), at the end of December 2016 from 40.1% (or 39.5% including OPEKEPE), a year earlier. NPLs declined by €2.5 bn year-on-year, settling at €24.4 bn in December 2016. This trend is a result of the combination of negative formation of new NPLs and write-offs. The formation of new NPLs in 2016 continued its downward trend of recent years. Specifically, the Group's NPL formation was negative in all quarters of 2016, with significant deleveraging in Greece, mainly in business loans. For Group retail loans, the negative NPL flow had started in the last quarter of 2015. The improvement in this category is mainly due to the active management of the loans in arrears portfolio by the Recovery Banking Unit (RBU). NPEs declined to €36.2 bn from €36.9 bn, at a slower pace compared to NPLs due to EBA rules regarding classifi-cation as NPEs for a specific period following restructuring. As part of the submission of operational targets for asset quality to ECB and BoG, Piraeus Bank has committed to reduce its NPEs, over the June 2016-December 2019 period by 41%, and its NPLs over 90 days past due (NPLs>90 days) by 58% over the same period (at the parent level). The relevant targets for 31.12.2016, both for NPEs and NPLs have been achieved. Provisions of €1,015 mn were booked in 2016, with total cumulative provisions at year-end 2016 amounting to €16,941 mn. The Group’s NPLs>90 days coverage by cumulative provisions stood at 69% at year-end 2016, higher than De-cember 2015 (65%). Per geographical region, the relative ratio stood at 70% in Greece and at 64% abroad. Including tangible collateral and guarantees, coverage reaches 135%. The Group’s cumulative provisions to gross loans ratio at year-end 2016 reached 25%, with 29% for business loans, 11% for mortgages, 39% for consumer loans and credit cards, from 26% in December 2015.

Capital AdequacyAs at 31.12.2016, the Group’s total equity amounted to €9.8 bn from €10.0 bn a year earlier, mainly due to the payment of approximately €166 mn interest for the CoCos of €2,040 mn (€118 mn net of tax). The Group’s Basel III total capital adequacy (CAD) ratio stood at 17.0% at the end of December 2016, equal to the Common Equity Tier 1 (CET1) ratio. The amount of deferred tax assets which is included in the Group’s regulatory capital in accordance with the provisions of L. 4172/2013, L. 4302/2014, L. 4340/2015 was €4.1 bn at 31 December 2016. The Group’s fully-loaded CET1 (to be implemented in 2024) stood at 16.2%. Following the conclusion of the Supervisory Review and Evaluation Process (SREP) for 2016, the ECB informed Pi-raeus Group of its total capital requirement, valid from 1.1.2017. According to the decision, Piraeus Bank has to maintain, on a consolidated basis, an overall capital requirement ratio of 13.0%, which includes: (a) the minimum Pillar I total capital requirements (Basel) as per article 92(1) of Regulation (EU) No. 575/2013; (b) the additional Pillar II capital requirement (Basel) as per article 16(2) of Regulation (EU) No. 1024/2013; and (c) the transitional capital conservation buffer of Regulation (EU) No. 575/2013, which for 2017 is set at 1.25%.

Group Results EvolutionThe Group’s net interest income amounted to €1.8 bn during 2016 versus €1.9 bn in 2015, despite the improvement from the drop in the cost of funding, due to asset deleveraging, a slight decrease in average loan spreads, as well as the decline of Euribor, the base for pricing most assets. Net commission income amounted to €0.3 bn, up 7% year-on-year, mainly due to commercial banking activities. Total net revenues for 2016 were €2.4 bn, at similar levels as in 2015. In 2016 financial results include an amount of +€106 mn from the Bank’s participation in ECBs quantitative easing (QE)

Business Report 39

programme through the sale of EFSF bonds, in accordance with the aforementioned. Moreover, there was a €77 mn one-off gain from the participation in VISA, resulting from the sale of VISA Europe to VISA Inc. on 21.6.2016. The Group’s total operating expenses in 2016 stood at €1.3 bn from €1.5 bn in 2015, while excluding the voluntary exit scheme (VES) expense recognized in 2015 (€111 mn), on a comparable basis, the annual decline in operating ex-penses for the Group for 2016 was 3%, resulting from the cost containment efforts implemented by Piraeus Bank. As a result of the above, Group pre-tax and provision profits for 2016 amounted to €1.0 bn from €0.9 bn in 2015. The results of 2016 were burdened by loan provisions of €1.0 bn, significantly lower than €3.5 bn in 2015, in line with the decline in NPLs, thus safeguarding the Group's balance sheet and bringing the cumulative provisions at the end of 2016 to €16.9 bn. The high level of cumulative provisions enables the Bank to address effectively the NPLs problem with long-term solutions, already implemented by the RBU. In addition, other receivables and assets were impaired by €0.2 bn versus €0.4 bn in 2015. The Group’s pre-tax result amounted to a loss of €168 mn, while the net result from continuing operations attribut-able to shareholders amounted to a loss of €4 mn in 2016 compared to losses of €1,858 mn in 2015, positively affected from the recognition of deferred tax in the impairments on the value of participations, for which there exists a commit-ment to sell or liquidation is foreseen in the near future. The following table presents selected Balance Sheet and Results. The figures for the period 1.1.2016-31.12.2016 include the results of ATE Insurance Romania SA, Piraeus Bank Cyprus Ltd (PBC) group of companies and ATE Insurance SA until the day of its disposal (1.8.2016). Additionally, a loss of €27.6 mn is included from the disposal of the ATE Insurance SA, based on the agreed sale price, which is subject to the standard adjustments. The figures for the period 1.1.2015-31.12.2015 include the results of the aforementioned companies and Piraeus Bank Egypt SAE group of com-panies until the date of their disposal (10.11.2015).

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Consolidated Data (amounts in € mn) 31.12.2016 31.12.2015 Δ% yoy

Selected Balance Sheet Figures

Assets 81,501 87,934 -7%

Deposits 42,365 39,358 8%

Gross Loans before Adjustments 66,648 68,071 -2%

Cumulative Provisions 16,941 17,480 -3%

Total Equity 9,824 10,021 -2%

Selected P&L Results FY 2016 FY 2015 Δ% yoy

Net Interest Income 1,811 1,877 -4%

Net Fee & Commission Income 326 306 7%

Net Trading & Inv. Securities Income 162 109 48%

Other Operating & Dividend Income 68 101 -33%

Net Revenues 2,366 2,393 -1%

- excl. one-off items 2,289 2,393 -4%

Personnel Expenses (628) (772) -19%

Administrative Expenses (584) (589) -1%

Depreciation & Amortization (111) (112) -1%

Total Operating Expenses (1,322) (1,473) -10%

- excl. one-off items (1,322) (1,361) -3%

Pre Provision Income (PPI) 1,044 920 13%

- excl. one-off items 967 1,032 -6%

Impairment Losses on Loans (1,015) (3,487) -71%

Impairment Losses on Other Assets (179) (351) -49%

Associates' Results (18) (13) -

Pre-Tax Result (168) (2,930) -

Income Tax 159 1,069 -

Net Result Attributable to Shareholders,

Continued Operations (4) (1,858) -

Non-Controlling Interest, Continued Operations (5) (3) -

Net Result from Discontinued Operations (31) (35) -

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Economy Developments

Greek Economy2016 was marked by the successful conclusion of the first review for the third Economic Adjustment Programme and the adoption of additional fiscal adjustment measures, the further relaxation of capital controls and the reinstatement of the waiver for GGBs, making GGBs once again eligible as collateral for ECB monetary policy operations. In 2016, the real GDP re-mained practically stable at 2015 levels, but at the fiscal level Greece achieved a sizeable primary general government surplus. During 2016, the real GDP, based on seasonally adjusted data, remained flat following a -0.3% decline in 2015. In ad-dition, the economic sentiment index improved to 91.8 points, from 89.7 points in 2015. In the first quarter of 2017, real GDP grew by 0.4% both on an annual and a quarterly basis. Meanwhile, in 2016 the inflation rate was -0.8% (2015: -1.7%). However, for the first time after a 45-month deflat-ing trend, inflation was 0.0% in December 2016, while it entered into positive territory in the first quarter of 2017. The unemployment rate stood at 23.5% in 2016 down from 24.9% in 2015. In 2016, the current account balance posted a deficit of -€1.1 bn (-0.6% of GDP), compared to a surplus of €206 mn (0.1% of GDP) in 2015. In the first quarter of 2017, the current account deficit widened by €160 mn compared to the corresponding quarter of 2016 and stood at -€2.5 bn. In 2016, the Greek economy had a robust fiscal performance. General government balance posted (excluding sup-port for financial institutions) surplus of 0.7% of GDP in 2016 from a 3.2% deficit in 2015, while the corresponding primary surplus reached 3.9% of GDP, compared with 0.4% in 2015. Based on the Economic Adjustment Programme methodology, which sets the targets to be met by the Greek government, the primary surplus is estimated at 4.2 % of GDP, significantly above the target for 0.5% of GDP. On a macroeconomic and fiscal level, the conclusion of the second review for the third Economic Adjustment Pro-gramme and the timely disbursement of the programme instalments for debt repayment and for reimbursement of state arrears as well as the implementation of debt relief measures are crucial for the course of the economy in 2017. The conclusion of the review, combined with the anticipated debt relief measures over time, is expected to lead to a gradual improvement in the economic sentiment, alongside with privatizations, the further relaxation of capital controls, the return to positive GDP growth rates and the participation of Greek bonds in the ECB's QE programme.

Global EconomyIn 2016 the course of the global economy was mainly affected by political developments and the interventions of Central Banks. Global GDP growth was 3.1% in 2016, with developed economies at 1.7%, and emerging and developing econo-mies at 4.1%. For 2017, the global economy is forecast to grow 3.5%, with a similar estimate for developed economies (2.0%), as well as developing economies (4.5%). In more detail, the GDP growth rate of the US economy slowed down to 1.6% in 2016 (from 2.6% in 2015), while inflation accelerated to 1.3% (from 0.1%). In its December 2016 meeting, the Federal Reserve (FED) increased its base

46 Business Report

rate (from 0.25%-0.50% to 0.50%-0.75%) and in March 2017 it proceeded with another increase (to 0.75% -1.00%). For 2017, GDP growth is anticipated to accelerate to 2.2% mainly due to the fiscal stimulus expected to be initiated by the new administration. The FED is expected to proceed with two further base rate increases (25 basis points each). The Eurozone’s economy GDP growth rate slowed down to 1.7% in 2016 (from 1.9% in 2015), while inflation remained at a very low level for a third consecutive year. For 2017, Eurozone’s GDP growth rate is projected to remain at 1.7%, with inflation to pick up to 1.5%. The ECB will continue to implement its QE programme until the end of 2017 (with monthly pur-chases of €60 bn). However, the initiation of processes for the "Brexit" and the upcoming elections in major European coun-tries create severe political concerns about the cohesion of the European Union. In addition, the acceleration of inflation will be exerting pressure to ECB to reduce the size of its QE programme. The GDP growth of China’s economy decelerated to 6.7% during 2016 (from 6.9% in 2015), which is the lowest growth rate since 1990. The significant reduction of foreign exchange reserves (by $320 bn during 2016 or by $830 bn over the 2015-2016 period), which supported the Chinese currency, reflects the risks lurking for China’s economy. For 2017, the GDP growth rate of the Chinese economy is expected to slow down even further (to 6.5%) and the Central Bank of China will continue supporting its currency and taking actions to prevent the steep deceleration of the economy. Thus, 2017 is expected to be characterized by the policies followed by the major central banks (the FED is antici-pated to continue its return to the "normalcy" of its policy, whereas the ECB and the Central Bank of Japan will continue their QE policies), the fiscal stimulus to be initiated by the new US administration, and the political developments in the European Union.

Southeast EuropeIn 2016, SEE economies maintained the dynamics of the previous year by posting higher positive growth rates than the region and their European partners. The increased presence of foreign companies and investments in production units in most of these countries maintained production levels, employment rates and exports at increased levels. As a result, real GDP grew further in 2016, with similar signs of improvement evident in nominal GDP. Deflationary pressures continued in 2016 following the European trend, with most countries remaining in negative annual rates of change. However, the last few months of the year witnessed a reversal of the trend, with inflation expected to re-emerge in the first half of 2017. As a result of GDP increase, there has been a significant increase in consumer spending, while the re-launching and improved absorption of European funds are expected to improve the growth prospects for the next two years. The aforementioned combined with the significant fiscal consolidation achieved over the period 2011-2015 will contribute to maintaining public debt at sustainable levels. However, growing political uncertainty in some countries, such as Romania and Ukraine, may slow down the required structural reforms, jeopardize investments and curb the re-duction of the budget deficit. The key challenges for SEE in 2017 are the preservation of growth momentum, the combating of inflationary trends, the management of non-performing loans, as well as the safeguarding of the sustainability of the public sector.

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Market Review

Equity markets saw positive performances during 2016, as the prices of US equities (based on S&P500 Index) rose by 9.5%, the prices of British equities (based on FTSE100 Index) by 14.5% and the prices of developing countries equities by 8.5%. At the same time, the prices of European equities (based on Euro Stoxx 600 Index) fell marginally (by -1.1%) and the prices of Japanese equities (based on NIKKEI 225 Index) increased marginally (by 0.5%). In total, share prices (based on MSCI World Index) rose by 5.3%. The US government bond yields surged due to the rising expectations following the outcome of the US presidential elections in November 2016. By way of illustration, the 10-year US Treasury yield rose by 17 basis points (to 2.44% by the end of 2016). On the other hand, yields on German government bonds dropped 42 basis points (to 0.21% at the end of 2016), due to the ECB's QE programme and the growing political risk within the EU. At the same time, the spread of US corporate bond yields (as compared to 10-year US Treasury yield) declined by 97 basis points (according to Moody’s Corporate Bond ΒAA Index). The BofA Merrill Lynch Euro Corporate Index started in 2016 at 102 basis points and de-clined to 72 basis points at the end of the year, very close to the historical average of 77 basis points. The international energy prices increased significantly during 2016, as the price of American crude oil rose by 45% and that of Brent by 53%. In addition, the prices of industrial metals (based on the S&P GS Industrial Metals Index) increased by 19% and of gold by 8%. Overall, the prices of commodities (based on the S&P GS Commodities Index) in-creased by 28% and of freight rates (based on the Baltic Dry Index) by 101%, remaining however at a relatively low level. The USD was strengthened by 2.5% (trade-weighted exchange rate) during 2016, while the Euro dropped by 1.1% (trade-weighted exchange rate). More specifically, the Euro dropped by 3.3% in relation to the USD, which in turn dropped 2.7% in relation to the Yen. Following the result of the British "Brexit" referendum, the GBP fell 16.5% against the USD and 13.5% against the Euro. Despite the liquidation of a significant part of the currency reserves by the People’s Bank of China, the USD was up 7% against the Chinese Yuan. Following the election of the new president in the United States, the possibility of the international economy moving away from the monetary model has grown considerably. Focus is being drawn to the real economy, with priority to fiscal stimulus. This shift has led to significant euphoria in the markets, as the new model is projected to lead to a more bal-anced and sustainable global economic acceleration. The investment sentiment for 2017 (and thereafter) will depend on whether market expectations, as well as sig-nificant leading indicators, will be at least partially self-fulfilled and on whether the transition to the new model will be smooth or if an excessive strengthening of the USD and a parallel rise in the USD cost of money will be inhibiting factors. At the same time, 2017 is a year of significant elections in Eurozone countries, which increase political uncertainty.

Piraeus Bank ShareOn 31.12.2016, the Bank’s share capital amounted to €2,619,954,984 divided into 8,733,183,280 ordinary registered voting shares, at a nominal value of €0.30 each. Common shares of Piraeus Bank are intangible and listed on Athens Ex-change. In accordance to the regulations of L. 3864/2010 and Ministers Council Acts 38/2012 & 6/2013, the HFSF issued

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843,637,022 warrants to the private investors that participated in the 2013 capital increase. Pursuant to par. 1, article 16C of L. 3864/2010 the acquisition of treasury shares by the Bank is not permitted, with-out the approval of HFSF, for as long as the HFSF is a shareholder of the Bank. The purchases and sales of treasury shares in 2016, as well as the treasury shares owned as of 31.12.2016, are related to transactions carried out by the Group's subsidiary Piraeus Securities SA as part of its activities as a market maker. Intense volatility and variations were present for most of 2016. Piraeus Bank's share closed at €0.209 on 31.12.2016 (-25% yoy). The corresponding annual change for the banking index in 2016 was -29%. Piraeus Bank shareholder structure presents great diversity. The total number of common shareholders was 83,000 in December 2016. The HFSF held 26% of the outstanding common shares and the remaining 74% was held by the private sector, 68% by legal entities and 6% by individuals. More specifically, Piraeus Bank's shareholder structure was as follows:

68%

26%

6%

Shareholders' Structure

Legal entities

HFSF

Individuals

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Targets and Outlook

Piraeus Bank Group, maintaining a prominent position in the Greek banking market, has assumed a key role in the re-construction of the Greek economy. At the same time, Piraeus Bank continues to maintain its character as a bank specializing in providing services to medium and small businesses. With its strong capital base, Piraeus Bank seeks to contribute actively in providing liquidity to businesses and house-holds while at the same time to support the financing of creditworthy investment plans. The first quarter of 2017 presented several challenges for the domestic financial and banking environment. The an-ticipated reforms of Greece's economic support programme are expected to accelerate the recovery and restructuring of the economy, while the expectations of most international and institutional bodies are estimating a positive GDP growth rate in 2017. The successful conclusion of the second evaluation of Greece’s financial facility programme, is expected to have positive influence on the restoration of confidence in the Greek economy. Piraeus Bank Group, under its new Chief Executive Officer Christos Megalou, announced in late May 2017, its Strategic Plan by 2020 entitled "Agenda 2020", aiming to make Piraeus Bank the most trusted bank in Greece, creating value for shareholders, customers and employees. "Agenda 2020" aims to set distinct strategic priorities in the medium-term that will enhance the confidence of share-holders, customers and employees in the prospects of Piraeus Bank, while at the same time supersede its current goals. Thus Piraeus Bank will be able to meet the big challenge of substantially supporting the restart of the Greek economy. "Agenda 2020" is based on the following key goals and objectives:

• reduceNPLsandNPEstointernationallyacceptedlevels;• createaprofitableandsustainablebusinessmodel,withattractivereturnsfor

shareholders over the medium-term;• maintain a strong capital base;• re-establish wholesale market funding access.

"Agenda 2020" comprises six specific strategy enablers:

• De-risk the Balance Sheet, to be achieved by separating the Group into two operating pillars to maximise value from the core businesses of the Group and focus on realising valuefromlegacyholdings.Withthissplit,PiraeusBankaimstostreamlineitsoperationsand enhance organic capital generation.

The two pillars are:

a. Piraeus Bank, which will focus on the competitive advantages of its core domestic customer

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business, having risk weighted assets of €28.4 bn currently. It will focus on financing healthy borrowers, while aiming to maintain its leading market position in customer deposits. Piraeus will remain a prominent SME & corporate Bank, along with increased generation of retail loan products under a risk-adjusted approach.

b. Piraeus Legacy Unit (PLU), comprising of non-core assets that also include attractive long-term businesses with strong market positions that, however, do not meet the targeted return profile of the Group. A dedicated management team will seek to maximise value by executing value-generating disposals or pursuing additional transformational opportuni-ties. These businesses and assets will initially include the Recovery Banking Unit (RBU) loans, stakes in non-core domestic assets, repossessed real estate properties (REO) and interna-tional operations included in the Bank’s Restructuring Plan. Total risk weighted assets of PLU currently equal €24.7 bn.

By the end of 2020, it is expected that total Group assets will be reduced to c.€70 bn, with more than 80% contribution by Piraeus Bank (core) assets vs. c.65% currently. PLU loans will decrease from €37 bn currently to below €20 bn, while PLU RWAs will reduce from c.€25 bn by approximately half. The Group’s cost-to-income ratio will be improved to mid-forties, while the Group’s return on assets (RoA) will increase to levels above 1.0%.

• Resize and Focus by conducting a disciplined review of all existing businesses, in order to maximise resources deployed in the areas that Piraeus has a historically dominant position. ThiswillincludeasimplifiedGroupstructureandeffectivecostrationalisationmeasures,aswell as further optimisation of our branch network and targeted investments in digitalisation.

• ImplementaProfitableandSustainableBusinessModel,leveragingexistingvaluedcoreclient relationships, and focusing on greater cross-selling opportunities, as well as fee-generative activities. Piraeus Bank aims to continue developing innovative products, marketing to selected customer segments through a multi-channel distribution strategy, while deploying a targeted and risk-based credit policy, and implementing advanced risk-basedpricingmethodologiestoensuresustainablyattractivereturnsonitscoreoperations.

• Optimise Capital Allocation through the implementation of a risk appetite framework that includes a portfolio-based approach to capital allocation. Piraeus plans to maintain a well-capitalised balance sheet, able to withstand unexpected external shocks, yet still provide superior returns to its shareholders.

• Strengthen Risk Monitoring and Controls. Piraeus Bank places particular emphasis oneffectivemonitoringandriskmanagement,withaviewtomaintainingstabilityand continuity of our operations. Piraeus will further strengthen its support and control functions (Audit, Compliance, Credit Risk, Finance, Legal, and Operational Risk Management) consistent with the three lines of defence principle.

• AdoptSuperiorGovernanceStandards.PiraeusBankhasalreadyexecutedonspecificrequirementsaspertheHFSFlaw,andhasrevisedRFAandRestructuringPlanrequirementsoncorporategovernance.TheBankhasalsoconcludedthere-compositionofitsBoardofDirectors,whileensuringuninterruptedBoardandCommitteemeetings.Piraeus now has a Board of Directors with well-esteemed international members, who bringwiththemsignificant,diverseexperienceinbanking,risk,andNPLmanagement.

"Agenda 2020" establishes a clear set of strategic priorities that, in conjunction with focused and effective execution, will provide a clear and visible path to a full recovery for Piraeus Bank.

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Operations in Greece

Piraeus Bank Group is the largest banking institution in terms of assets, loans and deposits in Greece playing a leading role in the provision of banking services and credit to SMEs with an annual turnover of €2.5 mn-€50 mn. Moreover, the Bank is among the key providers of banking services to individuals and one of the main providers of advisory services for capital markets, investment banking, leasing and shipping banking in Greece. The Group also has a leading position in electronic banking services and applications, in financing environmentally friendly projects (green banking), as well as in funding the agricultural sector with products and services adapted to each customer’s needs. Piraeus Bank was one of the first institutions to participate in the restructuring of the domestic banking system and is now one of the four systemic banks in Greece.

ThemajorityofPiraeusBankGroup’sbankingactivitiesistargeted at the Greek market and includes retail, commercial and investment banking, as well as capital management.

At year-end 2016, approximately 93% of the Group’s total assets was composed of domestic assets. Domestic activities constituted 92% of total net revenues for the financial year ending on 31.12.2016. 95% of Group loans to customers involved borrowers in the domestic market. Piraeus Bank continues to have a broadly dispersed presence in various sectors of the economy, while its credit exposures are significantly secured with collaterals and guarantees, in addition to cumulative provisions. With regard to 2016 financial performance, gross loans of Piraeus Bank and its subsidiaries in Greece amounted to €63.0 bn, of which approximately €1.7 bn, which was repaid in early 2017, was related to a seasonal agri-loan facility to OPEKEPE, enabling the disbursement of EU subsidies funds to approx. 700 thousand farmers. The business portfolio constitutes 66% of total portfolio, while loans to individuals 34%. In Greece, the NPLs over 90 days past due of total loans ratio was 37.5% at the end of 2016 (or 36.5% including OPEKEPE) from 40.0% (or 39.4% including OPEKEPE) in 2015. Group deposits in Greece amounted to €39.3 bn, increasing 8% year on year. Piraeus Bank is the leading bank in Greece in terms of deposit market share, 29% at the end of 2016, while its loans’ market share stood at 30%.

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Gross Loans (€mn) 62,998 63,922 -1%

Customer Deposits (€mn) 39,322 36,547 8%

Branches (#) 660 709 -7%

Employees (#) 14,492 15,599 -7%

Basic Figures in Greece 31.12.2016 31.12.2015 Change

Customer deposits in Greece, following a significant decline in 2015 due to uncertainty in the country, recovered by €2.8 bn – mainly during the second half of 2016 – assisted by the Greek State's reimbursement of state arrears and the relaxation of capital controls, combined with the Bank’s targeted customer campaigns and product offerings. The declin-ing trend in the cost of time deposits continued throughout 2016, with the cost of new time deposits standing at 0.65% in December 2016, compared with 0.95% in December 2015.

Retail BankingThe Group’s domestic operations in Retail Banking are conducted through the Bank and its branch network, as well as through digital service channels, such as the winbank e-banking platform and the winbank mobile application. In 2016 the Bank's Retail Banking division focused on developing and delivering a comprehensive network of channels, services and products to customers, in order to cover the whole range of their needs, offering an overall multi-channel and unique experience with the Bank. Following the greatest ordeal of recent years in 2015, due to the severe liquidity deterioration resulting from the uncertainty regarding the developments about the country’s financing, the bank holiday and the imposition of capital controls, the Greek banking system, including Piraeus Bank, stabilized in 2016. The consequences of the previous year proved to be manageable. The domestic customer deposits’ outflow from Greek banks was reversed, leading to a 4% increase in private sector domestic deposits in the domestic banking system at 31.12.2016, compared to 31.12.2015. Retail Banking, combining market knowledge and years of experience and know-how, continues to support responsibly and actively private individuals and businesses at every step. It invests significantly in the use of innovative technology and of modern methods for using large datasets, in a way that the services offered are affordable and improve the customers' daily routines, by adding value to their business plans. The Bank’s retail banking customers are offered a wide range of different types of deposit, credit and investment products, including savings or current accounts, time deposits, investment products, consumer loans and mortgages, credit cards, bancassurance and insurance products, as well as a wide spectrum of banking services. Emphasis is placed on digital service networks. Piraeus Bank has focused on the innovative design and configuration of 24/7 customer service infrastructure through sophisticated and easy-to-use web and mobile banking and easy ATM access. At the same time, it supported the increasing use of digital channels so as to ensure a single excellent experi-ence is provided through all available channels. Innovation and the use of new technologies, within the framework of the Bank's integrated digital strategy, aim at simplifying the customers' daily transactions and minimizing time, in order to transform the branch's role from a transaction and simple request processing channel to a product promotion and inte-gration and advisory service channel. In 2016, these top e-banking services as well as the Bank's payment systems were utilized by a large number of customers, which helped to improve the transaction service and reduce operating costs. Aiming to provide quality service and keeping the customer at the core of its strategic decisions, Piraeus Bank re-tained the largest coverage in Greece in 2016, focusing on areas of high economic and commercial dynamics. For another year, the Bank focused on honest communication with its depositors, insisting on providing substantial information, providing access to the Bank’s customers so as to ensure and facilitate smooth transactional activity, as much as possible. The Bank's positive impressions on customers and the market in general is reflected in customer satisfaction surveys, where the Bank remains firmly in the first place. With the implementation of new international standards, 2017 is expected to become another milestone for Retail Banking, and Piraeus Bank will actively contribute to restoring customer confidence in the Greek banking system and will support entrepreneurship and the restart of the Greek economy.

Retail Banking Operations Development

Branch NetworkPiraeus Bank’s branch network consistently and methodically operates within the new Global Bank Environment, re-specting the customers’ ever-changing needs and improving its efficiency.

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Since May 2016 and following detailed planning of actions aligned with the Bank's Strategic Goals, Pilot Actions were implemented in selected branches, aiming for the following expected benefits:

• OptimizationofBranchoperationalefficiency.• TransitionfromtraditionalcashtransactionstowardsDigitalNetworks.• OptimizationofBranchNetworkfootprint.• Increaseofcustomerloyaltyandefficiency,throughactionsboostingcommercialactivity

at a branch level.

The results of the pilot actions were highly encouraging and full implementation by the entire Branch Network will be rolled out during 2017. In the context of optimizing Branch Network footprint and increasing efficiency, 47 branches were merged during 2016, resulting in a total of 660 branches at the end of 2016.

Mass Retail SegmentThe Bank’s Mass Retail Segment includes approximately 5 million private customers holding a significant percentage of deposit, investment and loan balances. The Mass Retail Segment aims for retail customers to develop a relationship with the Bank through the expansion of their portfolio, so that Piraeus Bank becomes their first choice. The Bank’s priority for 2017 is the formulation of a holistic commercial approach for each of the major sub-segments of the Mass Segment, as well as the creation of the ap-propriate infrastructure for the reception, the deepening of relationships and the preservation of the Bank's customers. An additional goal is the development of a multi-channel banking behaviour in customers and the migration of banking transactions from physical to digital channels. In this context, during 2016, Branch Network employees at-tended training courses in their branches so as to provide in-branch education of customers regarding the use of digital channels. It is worth noting that Piraeus Bank excelled in the National Customer Service Awards in the "Customer Service Training" category for the design and implementation of these training programmes. The training programmes will con-tinue throughout 2017 and will be enriched with targeted promotions to support the multi-channel behaviour of Mass Segment customers.

Affluent Banking SegmentIn 2016, the Affluent Banking Segment strengthened and consolidated its actions to support strategic goals, by at-tracting deposits, increasing commission income, deepening the relationship with affluent customers, and promoting Personal Banking services. In terms of results, the participation of affluent customers in the Bank's actions for deposit inflow and recovery was remarkable, as a result of targeted actions. In addition, the upward trend in the percentage of life insurance products held by affluent customers continued. There was an increase in credit card issuance, and in new Winbank users, as a result of an attempt to migrate banking transactions to digital channels. The cross-selling index in the Affluent Segment stood at 5.60 at 31.12.2016. The performance of Personal Banking Officers proved catalytic to these results, with sales to affluent customers significantly higher than sales in branches without the relevant personnel. In 2016 the most notable initiatives and services carried out include:

• A specialized page for Personal Banking customers has been created in the Bank's renewed e-banking (winbank) platform, with access to information concerning them.

• ThePersonalBankingwebsitehasbeenenhancedwithtoolsthatbringoutthebenefits to users of this service model, as well as targeted updates for services and products tailored to their needs.

• PersonalBankingOfficersandtheirimmediatesuperiorshavereceivededucationalmaterial and specialized updates on how to detect and react to customer concerns, to market and competition-related issues.

• Two newcycleswereaddedtothe18-monthSchoolforPersonalBankingOfficers.

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Personal Banking senior executives successfully completed the six-month training plan.• The advantages and synergies from the vertical integration of the Segment’s

organizational structure were fully understood, with particular emphasis placed on strengthening commercial interaction.

• ThesupporttoolsusedbyPersonalBankingOfficerswereupgradedtoincludenew functionalities, allowing for a more comprehensive and speedier monitoring of sales processes, and of customer relationships.

• The Personal Banking Customer Service at Piraeus Direct Services (PDS) has been strengthened to provide the customer with the best and fastest service.

• JointactionswithBankunitsandexternalpartieswerecarriedouttoimprovetargetedproduct promotion and to inform customers of special partnerships and services. Promotionalinitiativeswereimplementedoncutting-edgeproductsandthemarketingmaterial was customized for Personal Banking customers.

• Finally,duringtheyear,pilotprojectswerecarriedouttoassesshowcustomersrespondto alternative initiatives and service channels.

At the end of 2016, Piraeus Bank's Personal Banking served customers in 271 Network branches, with most of the Bank's Affluent Clients having their own Personal Banking Officer.

Small Business Banking SegmentThe SBB Segment (Small Businesses & Professionals with a turnover of up to €2.5 mn) is a significant part of the Bank's total deposit and loan portfolio. Recognizing the value of these customers and, at the same time, the margins and the importance of developing relationships with them, the Bank operates under a specific model of commercial development and sale promotion, so as to focus more effectively on understanding and covering their particular needs. In 2016, important steps were taken for improving commercial development and upgrading the infrastructure, in-cluding the following:

• The holistic banking business model was set up, providing services to "premium" customersin230branches(mainlylegalentitiesandsoleownerships,withsignificantvalue and growth prospects). The model, which promotes extroversion and active management of customer relationships, includes the provision of up-to-date service and advice by experienced and trained executives (Small Business and Professional Partners - SBPPs) regarding the entire range of business activities (banking products and business-related services, development programmes, value-added services).

• Commercialofferswereenrichedwiththeinclusionofinnovativeproductsandservices: • Piraeus Open Business Working Capital POS: a flexible financing tool connected to point-of-

sale terminals (POS) transactions. • "Teiresias TSEK" Service: a service by Teiresias SA aimed at businesses and traders, providing

them with information on the solvency of their customers and suppliers and therefore provid-ing additional protection against transaction risks.

• New e-banking platform for businesses (winbank for Business) with upgraded functionality. • Launch of a dedicated premium customer service line.• Initiatives for rationalization, enrichment and customer analysis have been implemented,

enhancingcommercialefficiency.• The level of knowledge and skills of SBPPs has been strengthened to improve customer

service. In 2016 more than 250 executives were trained in the special "SBPPs School",

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using a variety of training tools and the relevant support material was circulated. Their training and guidance are continued through the group of Small Business Sales Managers.

• The management reporting systems and processes and available customer relationship management (CRM) tools were upgraded.

• Withregardtotheimprovementofthequalityofthecorporateloanportfolio,adhoc andrecurringactionswerecarriedout,leadingtoadeclineinshort-termNPLratios andnegativeNPLformation.

In terms of results, Piraeus Bank has a strong presence in the merchant acquiring market, and has witnessed an increase in deposits and credit card sales to SBB Segment customers. In addition, the Bank has improved its relationship with premium customers, as reflected by a 7% increase in the cross-selling ratio. Finally, the SBB Segment contributes significantly to the Bank's commission income.

Retail Planning, Quality of Service & Performance MonitoringThe Retail Planning, Quality of Service & Performance Monitoring Unit has assisted in setting and coordinating a common framework for the design, synthesis and systematic monitoring of the Retail Banking, Branch Network and Deposits segment. More specifically, the Unit actively participated in the development, coordination, support and regular monitoring of Retail Banking's overall business and commercial plan. It coordinated systematically major projects and initiatives by all Retail Banking units and undertook initiatives for the continuous upgrading of Branch Network operations in coop-eration with the relevant units of the Bank and for monitoring their effectiveness. The Unit also actively participated in formulating and monitoring the consolidated and detailed Budget of Revenues and Expenses for Retail Banking, as well as in designing performance monitoring reports. During 2016, the "PYXIDA" Branch Network Performance Monitoring Mechanism was upgraded with additional views for selected customer groups (Affluent Clients and Small Businesses & Professionals), the implementation of which - at the beginning of 2017 - will strengthen the essential communication between Management, the Branch Network and the Segments. In addition, cooperation with Group companies was commercially exploited and the benefits of these synergies were enhanced, both in terms of achieving business goals and in forming an integrated value proposition to customers - Indi-viduals, Small Businesses and Professionals. The Unit was responsible for coordinating the work of the new Committees – the "Retail Committee" and the "Cam-paign Planning Committee" – aiming at aligning the commercial operations with the overall Retail Banking strategy, en-hancing horizontal partnerships and encouraging dialogue. More specifically, the "Retail Committee", which consists of the Retail Segment Management Team, the Group Marketing & Communications Unit and the Press Office, finalizes the overall commercial and marketing plan of Retail Banking and the individual commercial initiatives. Current competition activity and the results of recent surveys are decoded. Respectively, the "Campaign Planning Committee" aims to prioritize and schedule campaigns across the Bank's Networks, as well as an overview of the results of past campaigns, aiming to continuously enhance commercial effectiveness and ensure full harmonization with Retail Banking's overall business plan. The Unit participated actively in planning and coordinating the range of marketing and corporate sustainable devel-opment actions of Retail Banking, by encouraging initiatives and sponsorship proposals at local level, thereby enhancing the links of Retail Banking with cultural institutions inside and outside the Group.

Customer Experience & LoyaltyIn 2016, aiming at achieving Customer Experience Excellence, the Customer Experience & Loyalty team continued to focus on strategic management processes and the ongoing improvement of customer experience. In this context, the yellow reward scheme was successfully launched on 23.11.2016, offering tangible and emotional value to the client, enhancing profitability and revenue inflow into Retail Banking. The new yellow reward scheme is related to the overall relationship between retail customers and the Bank and ultimately creates a "live" banking experience, making this relationship more substantial, thus enhancing customer loyalty to the Bank. In particular, the customer-member of the programme gains yellows for simple daily transactions with the Bank. The yellows may be redeemed at the 18 Partners of the Programme: Attica, Avis, Henry Durant, e-FOOD.gr, Grecotel, Heron, Hondos Center, Intersport, Masoutis, Media Markt, Public, Shell, Sklavenitis, Ticket365.gr, Travelplanet24, Health Club, Wind and Chalkiadakis and, of course, through the Group’s renewed offer service, yellowday.

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The response from customers and the network was impressive. By the end of 2016 the yellow reward scheme had 280,000 members and the marketing campaign, launched on 28.11.2016, had a positive and effective impact on people. To ensure the customer's best online experience, the yellowday service –the Bank's website for buying consumer goods– is now the main electronic channel for redeeming yellows and the Bank’s competitive edge in bank loyalty schemes. In 2016, significant brands were added to the service’s partners, there was an increase of 70% in users (90,000 ac-tive), the gross commission income doubled, while operating costs were reduced by approximately 30%. The bottom-line result of the service improved by 55%, on the back of all modern optimization and marketing techniques. In the context of the needs of Retail Banking strategic planning and of the individual product groups, the most up-to-date User Experience (UX) methods, such as "one-to-one user testing", "customer journey maps", "A/B testing" were applied in order to acquire deep capabilities in "user experience" and user interfaces across the Bank’s digital - and not only - processes. Using the findings from applying the above methods, the specialized UX team worked methodically and efficiently, making "key" changes to the Bank’s digital, mainly, channels. The successful completion of the redesign of Piraeus Asset Management SA portal, the redesign of yellowday.gr and the yellowday app, as well as the participation of the team in the design of the information portal about "360o Funding" financial support programmes, are factors that have a positive impact on customer satisfaction and brand awareness. The trained Websites Management team that manages and supervises the digital content of Piraeus Bank's web-site made a significant contribution in the implementation of the changes in the Piraeus Bank Group website, always aiming at the end-user's positive experience. In 2016, this team handled around 2,000 requests from various Bank's product groups. Moreover, management of the digital communication of the Bank's websites continued to be successful, resulting in a 34% increase in the total traffic of www.piraeusbank.gr (44 million hits), a 36% increase in search engine traffic and a 13% increase in winbank Facebook followers/ "fans". With regard to social media customer service, the Digital Presence Management team, in cooperation with Contact Centre, handled approximately 1,500 user messages and queries, with an average response time of 20 minutes. Always focusing on improving customer experience, the Voice of the Customer expert team continued its measure-ment in 2016, using the most advanced text analytics technologies that were integrated into its Enterprise Feedback Management Project, to be able to manage and analyse large volumes of text data from all of the Bank’s available sources, to seek and create business knowledge, to optimize processes. All this wealth is disseminated to all Retail Bank-ing Divisions on a quarterly basis. More specifically, in 2016 Voice of the Customer team measured the experience of 132,000 customers at 31 Mo-ments of Truth, analysed 605,000 spontaneous comments received from all channels (e.g. surveys, e-mail, chats, complaints platform, etc.), drawing more than 400 improvement suggestions. Of these, 25% have been implemented, while 22% are either assessed for the prospect of implementation or are already in progress. The goal of Customer Experience & Loyalty for 2017 is to significantly strengthen Piraeus Bank's strong competitive advantage in improving its customer experience through the continuation and enrichment of the yellow reward programme and the implementation of a new Loyalty Programme for other customer segments. An additional aim is to maximize the use of advanced technologies for analysing customer experience, linking quality indicators to the Bank's main financials (e.g. profitability, revenue, etc.), as well as reducing operating costs through the optimization of its internal processes.

Customer Value ManagementIn 2016, focusing on the continuous improvement of customer experience, the Bank used the results of detailed sur-veys aimed at identifying the special characteristics and needs of the customers, at evaluating the dynamic develop-ment of specific customer segments and at recognizing the events in a customer’s life that call for the Bank’s direct involvement. Combining modern analytics such as multidimensional behavioural segmentation, predictive modelling and event-triggered marketing with earnings data, the Customer Value Management Unit has structured a customer development and marketing plan implemented primarily through the Bank's internal channels. As a result, targeted messages were communicated to approximately 2.1 million customers (7% increase versus 2015), resulting in a very positive response. Specifically: 25% of customers responded to the below-the-line marketing and promotional initiatives implemented by Retail Banking, with the new product market increasing by 65% compared to 2015 - as a result of promotions. In order to improve the customer experience in implementing below-the-line marketing and promotional initiatives, the channels and the time that customers choose to carry out their banking activities were used primarily. In addition, the

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Retail Banking marketing plan for 2016 has increasingly used digital channels. By way of example, approximately 8 times more emails were sent out compared to 2015, replacing more traditional and cost-intensive communication channels, such as letters. Additionally, the strategic decisions of Retail Banking were based on the customer-targeted actions through special-ized analyses, while innovative reporting instruments were used to evaluate the results from strategic projects, permitting the visualization of the results and the easier extraction of detailed findings.

Deposit ProductsDespite initial estimates for deterioration of the economic sentiment in 2016, the conclusion of the first review for the third Economic Adjustment Programme and the relaxation of capital restrictions shaped the climate which allowed the system to recapture the funds it had lost since November 2014 in the second half of the year, at a slow but steady pace. Throughout the year the Bank implemented a detailed plan for recovering its deposit base, focusing on the recovery of outflows. The plan included the promotion of competitive products with strong marketing support, detailed planning of targeted actions and close monitoring of results. This strategy, coupled with the strong deposit culture of the Bank's executives, led to the growth targets set for the year. In particular, retail deposits stood at €30.0 bn, up by €1.7 bn year-on-year. This effort was assisted by the development of appropriate and competitive deposit products, in particular the availability of the new "Cash Back" Time Deposit to attract cash stashed away outside the system, as well as weekly issues of structured deposits with a guaranteed interest rate and the possibility of additional return, depending on the performance of specific indicators. Despite the volatile environment, the Bank continued its systematic effort to reduce the average cost of deposits, which dropped further in 2016, laying the foundations and prerequisites for achieving its long-term goals. Finally, 2016 marked the beginning of developing important service infrastructures, with emphasis on mobilizing specific customer behaviours to make the Bank the customers’ primary bank.

Mortgage and Consumer CreditIn the context of improving the quality of service to retail and mortgage customers, in 2016 the Bank implemented the optimization programme for existing systems and processes, adopting quantitative and qualitative rules, in accordance with international quality standards. This initiative was designed in 2015 with the help of internationally recognized con-sultants, and in 2016 their qualitative and quantitative redesign continued. These initiatives were designed to improve customer experience and to reduce operating costs. Following the Bank’s implementation of the Value Based Management model, Value Cells are better equipped in rec-ognizing cost reduction opportunities, increasing financial/commercial performance, optimizing the operating model, and ultimately strengthening customer-perception indicators. In 2016, loans through partners continued to constitute an important area in the development of consumer loans. Targeting specific markets, redefining Business Development & Monitoring Policies, and developing new collaborations and enhancing existing ones have been the key pillars of the Bank’s business strategy. In this direction, responding to the evolving needs of its partners, the Bank designed and implemented "Key2busi-ness", an innovative and interactive application for loan application management. In the context of "green growth", there has been a direct response and collaboration with the competent bodies for the faster and more efficient allocation of resources through the interim "Energy Efficiency at Household Buildings" Programme, in early September 2016. Piraeus Bank actively participated, successfully managing approximately 3,500 applications, which accounted for 41% of the total number of applications approved from all the banks that participated in the programme. To date, it is estimated –with certainty– that more than 15,500 households have implemented the interventions required to save energy. Focusing on improving customer service experience and managing operating costs more effectively, the main objec-tive for 2017 is to complete a customer-centric analysis model that will assist in applying advanced customer segmenta-tion, based on risk and return characteristics. Through this model, customer trends and behaviours will be analysed in order to create the optimal offer per customer, one that will meet their needs, enhance their value for the Bank and will be provided through all of the Bank's service channels. Domestic loans at the end of 2016 amounted to €15.7 bn for housing loans and €4.6 bn for consumer loans (exclud-ing credit cards), and the Bank's market shares at the end of December 2016 stood at 26% and 21%, respectively.

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Card Issuing2016 was a very important year for the card market, given the large increase in volume and value transactions, as a result of introducing "plastic" in the mind of the average consumer as a basic means of payment. More specifically for Piraeus Bank, debit cards followed a spectacularly upward trend compared to 2015, increasing by 182% in number of transactions and by 145% in volume of purchase transactions. For credit cards, the respective percentages increased by 34% and 21%, while for prepaid cards the respective annual changes were 9% and 2%, as a result of the capital controls restrictions, which are still applicable to a certain extent to this category of cards. New products, such as the Private Banking debit card, designed specifically for High Net Worth Individuals and the Credit Agro-Carta (credit card for Farmers), which covers the modern needs of the average farmer, in an effort to strengthen the agricultural sector. In addition, in 2016, a new prepaid card for the credit of the "Social Solidarity Income" allowance to the beneficiaries was issued. More than 100 product promotion and operations development initiatives were implemented, many of them in partnership with strategic partners and sports clubs, offering significant reward benefits for cardholders, maintaining competitiveness and increasing the Bank’s market share in the relevant product portfolio. At the same time, being consistent with the customers-card holders in offering value-added services and keeping in touch with the ongoing trends in bank card usage internationally, in 2016 Piraeus Bank became the first bank to offer en masse in Greece the new service of making contactless payments taking advantage of the HCE (Host Card Emulation) technology. At the same time, 2016 was very important at the operational level as the migration of credit cards issued by the ex-Geniki bank and the former Panellinia Bank into a unified system was completed, thus completing the 7-bank merger cycle, achieving a reduction in operating costs and improving Customer service. Lastly, initiatives are continuously taken for the digitization and integration of new card technologies so as to main-tain the leading position in innovation issues and to enhance the overall experience of each customer.

Merchant AcquiringIn 2016 the Bank, capitalizing on the investments made at the end of 2015, in infrastructure (new applications man-agement/workflow) and innovative products and services (mobile POS, easypay POINT service, MasterPass Wallets), and because of the increased demand for card acceptance by commercial businesses, succeeded in becoming the pri-mary choice of most merchants. With a full range of card acceptance solutions, Paycenter POS, ePOS and mPOS solu-tions, the Bank successfully covered a business’s every need. As a result, the Bank more than doubled its card acceptance business. This increase was twice as high as the cor-responding increase in the Greek card acceptance market. In particular, for "card present" transactions, the correspond-ing increase was three times the market increase. The total portfolio of businesses collaborating with the Bank grew by 91% and the Bank’s installed POS terminals were up 88%, with all new terminals supporting "contactless" transactions. The Bank responded to the very high number of requests for the installation of new terminals by approving requests in real time and installing POS terminals within 3 days. eCommerce transactions, where the Bank is the market leader in the Greek market, increased and new partnership agreements were signed. Transactions through the ePOS platform increased by 13% compared to the previous year and turnover increased by 23%.

ePAYMENTS/easypay POINTIn 2016 payments towards third parties through the Bank’s payment channels (branches and digital channels) were an important customer interface segment and source of commissions. During yet another year, the Bank incorporated the largest number of collaborations with DIAS, assisting businesses in modernizing their payment receipt processes and laying the foundations for multifaceted cooperation. Specifically, new interbank collaborations for credit transfer increased by 39% while for direct debit the increase was 30%. The number of transactions increased by 25% and their value by 11%. In 2016, the MyBank service was launched through the ePOS Paycenter platform, so that Greek businesses can use the pan-European Preta S.A.S. service for online payments, as an alternative to the card payment acceptance and clear-ance circuit. Easypay POINT service, which offers the opportunity for bill and debt collection at the premises of third parties part-nering with the Bank, posted significant growth rates of its customer base in 2016. In the same year, hundreds of small businesses, mainly from the retail sector, joined the service, offering their customers bill-payment services through the

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Bank, increasing their store traffic and securing a significant additional income. At the same time, the Bank continued to enter collaborations with payment institutions and retail chains, offering the easypay POINT service under various part-nership business models. In 2016, dozens of new organizations were included in the range of supported payments, with emphasis on Municipal Water Supply and Sewerage Enterprises, and the foundations for new innovative services were laid.

Retail Banking Fraud Management (RBFM)In 2016 Retail Banking Fraud Management (RBFM) was placed under Digital Entrepreneurship, in the Retail Banking Division. Its primary responsibility is to prevent and preserve the security of transactions for the areas of responsibility overseen in Retail and Electronic Banking. Maintaining the innovation of continuous operation (24/7), the RBFM managed fraud incidents, which were up 49% compared to 2015, maintaining the financial loss stable, while raising the savings rate by 47% (€9.4 mn). Of the total €9.4 mn saved, more than €7 mn came from the unit’s operation outside banking hours, strengthening the Bank custom-ers’ sense of security and confidence. Following the Bank's strategic goal for installing new POS terminals in 2016, RBFM rated 31,000 new terminal re-quests for risk, 21% more than the terminals rated in 2015. As part of the development of new safeguards/services and the upgrading of existing rules and policies, a number of projects were implemented, the most important of which were the following:

• New card transactions dispute system: dispute process was automated and an additional channel for contests was created through the Contact Centre.

• ATMe-learning:implementationofthefirsttrainingprogrammeforBranchNetworkstaffin ATM security, card skimming and fork trapping issues.

• "Stop Payment": developing newfunctionalityintheEquationsystem,toavoidlossfromwiretransfersincaseofphishingattacksoutsidebankinghours.

At the same time, the team provided consultancy services on security issues of major Retail Banking projects such as winbank mobile, winbank wallet, and yellow.

"The priority of the RBFM is to protect the Bank's customer transactions. Its constant goal is to search for and adopt new methods for fraud prevention and protection against fraud, in order to enhance customer experience & service".

The continuous and required alignment with fraud trends relies on the integration of existing infrastructures, and the search for and development of new innovative solutions to enhance transaction security.

Consumer Credit In 2016, Consumer Credit was certified with IS0 9001:2015 by TUV Hellas for the consumer and mortgage cred-it approval services. This continued certification is proof of the Bank’s commitment to provide qualitative and effec-tive services and to ensure customer satisfaction, focusing on the modern and responsible management of their needs. This certification enhances the unit’s image and business performance, and creates a competitive advantage. Additionally, the certification enhances the effective management of business risk, helps in reducing operating costs and in resource-sav-ing, and increases employee satisfaction and sensitization. Certification under the new standard, following the certification of consumer credit approval services in 2013, emphasizes, inter alia, leadership, objectives, measurement and management of change, continuous and two-way communication, and finally documentation of information no matter where it comes from. Steady to the fundamental principle of its credit philosophy for responsible lending, in 2016 Piraeus Bank continued to support households by covering their needs in the best possible way. Particular emphasis was placed on developing new instruments and models for the assessment of incoming ap-

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plications, incorporating the rules and practices of Credit Policy. The goal was twofold; On the one hand, the maximum automation of the approval process, limiting operational risk and production costs, and, on the other hand, a significant improvement in response time. A constant goal is meeting the needs and desires of customers in the best possible way, so as to achieve and maintain a mutually beneficial relationship.

Bancassurance Products and Insurance Brokerage

BancassuranceThe Group’s total portfolio under management amounted to €322 mn in 2016, with total profits from insurance broker-age activities amounted to €42.5 mn. Piraeus Bank established its Bancassurance Unit in 2008 aiming to offer its customers in Greece and abroad a range of insurance products, through its branch network, as well as through alternative service channels (call centre, winbank e-banking platform). With its specialized know-how, innovative products and optimal quality of service, the Bank aims to make use of its strategic partnerships with insurance companies NN and ERGO, maximizing value for the Bank and its customers. In collaboration with its subsidiary Piraeus Insurance Agency SA and other bank units, the Unit develops integrated bancassurance products, and mechanisms for automated customer management and service. The key issues for improvement and monitoring include the following:

• Effectivesaleofbancassuranceproducts,combinedwithproper,qualityandpromptservicingofcustomers,throughmotivationandcoachingofbranchsalesstaff.

• Constant development of insurance sale and management systems and processes, formonitoringthequalityofsalesandsustainabilityoftheBank’sportfolio.

• Development of tools and automation of processes for faster customer service.• Restructuring of existing products and development of newcustomizedandflexible

productstomeettheneedsofdifferentsegments,alwaysofferingthebestservice.• Full support for Contract Farming & Livestock rearing products and partnerships.• Constant development of the Bancassurance team and, above all, Sales Coaches so as to

providethebestserviceandsupporttotheBranchNetworkwithregardtoprocessesandsales.

In 2016, similarly to the Bank’s other segments, the Bancassurance unit capitalized fully on the Bank’s customers, the dynamics of the Branch Network, as well as the Group’s management team. Customers can choose the innovative insurance products and services that meet their needs. Network insurance specialists are present in every branch to assist customers in understanding and selecting the insurance programmes that cover their needs. Following the Bank's growth spurt in recent years and its strategic focus on promoting insurance products, Piraeus Bank’s Bancassurance retained a leading market share in Greece in 2016 of almost 40%, increasing the sense of re-sponsibility for developing new products in General Insurance, as well as in the growing Health and Life Insurance segments. Aiming to enhance its sales and responding to the customers’ growing needs for innovative and flexible bancas-surance products, the unit designed in collaboration with leading insurance companies four new products in 2016 in the fields of Life and General Insurance.

Piraeus Insurance Agency SAUsing its know-how and experience in managing and providing technical support to insurance programmes, as well as in organizing customer service systems, Piraeus Insurance Agency SA – in cooperation with the Bank’s Bancassurance unit – manages the Bank’s exclusive partnerships with insurance companies NN (Life insurance), & ERGO (Claims insurance), as well as the Group’s insurance coverage (e.g. property insurance, insurance coverage for employees, etc.). In collaboration with the Bank’s Bancassurance unit and the two aforementioned insurance companies, Piraeus Insur-ance Agency SA develops innovative products, capitalizing on the Bank’s customers and the Group’s needs, and aims to combine the products offered through the branch network and alternative service channels with the maximum benefits, so as to make them effective, innovative and attractive to customers.

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Piraeus Insurance and Reinsurance Brokerage SAPiraeus Insurance and Reinsurance Brokerage SA, a wholly-owned subsidiary of Piraeus Group, offers a complete range of insurance products and services for businesses, fully covering their insurance coverage needs. The company’s main aim is to capitalize on the Bank’s partnerships with healthy and active businesses, offering solutions for risk prevention, with specialized and innovative insurance products and services, thus ensuring their operation and sustainability in case of insurance risk in the form of damages or financial loss. The company's turnover for 2016 amounted to €8 mn and profit before tax to €5 mn, ranking Piraeus Insurance and Reinsurance Brokerage SA among the top companies in the industry. Through continuous improvement of the quality and services offered, with specialized executives, experience and profound knowledge of the insurance market, the company develops customized solutions that meet the needs of every business, on competitive terms and conditions.

Business BankingIn Greece, the Group has historically held a strong position in providing financial services to businesses operating in all sectors of the economy. It offers a wide range of deposit and funding products to businesses, including financial and investment advisory services and loans (in euro and other currencies), foreign exchange services, insurance products, custodial services and import/export services. The Bank’s focus of attention is on selecting high quality customers and systematically monitoring them by means of the most advanced risk management tools. At the same time, particular attention is paid to: exposure to the most promising sectors of the economy, ensuring that its lending is with strong collateral and guarantees, pricing relative to risk assumed, and continuous efforts to increase cross-selling. In this direction, the Group’s Credit unit has an important role and participates actively and systematically, through teams of experienced and specialized executives, in the effort to manage the credit risk from the Group's corporate loan portfolio by applying a single credit Policy and practice, as well as adhering to the processes of approval, renewal and closely monitoring credit limits. With the aim of safeguarding the Group’s balance sheet, in 2016, strict evaluation criteria for the corporate portfolio (large, medium and small businesses) were applied. Efforts to restructure, rationalize regulatory measures, enhance col-lateral and consolidate the NPLs portfolio were intensified. In particular, in 2016, the Credit unit focused on developing optimal NPLs management policies and further enhanc-ing approval processes through automation and fast track processes. The objective remains to ensure a balance between the Bank's credit risk and the significant support it offers to Greek companies due to its dominant position in the market.

Large Business Credit The Unit participates in the approval process for Large Business, Shipping Finance, Structured Finance and Corporate & Shipping Recovery portfolio as well as the business portfolio of foreign-owned subsidiaries and the risk-taking limits of international financial institutions. In 2016 the Unit also focused on providing credit to selected sectors of the economy, on providing financial support to viable Greek companies and on making the right choice in restructuring NPEs. In collaboration with external consultants, the unit actively participated in major projects concerning the optimal management of NPLs as well as in projects aimed at improving the efficiency of credit risk approval, management and monitoring processes.

Medium Business CreditDue to the prolonged recession in Greece and its negative impact on the development of entrepreneurship, in 2016 it was necessary to apply strict assessment criteria on the SME portfolio and ensure its cautious development. The Unit focused mainly on approving new lending requests from viable businesses, making use of development programmes in which the Bank participated and utilizing the co-funding and risk-sharing tools that they provided. In addition, the Unit participated in a number of projects aimed at improving processes and computer applications used in business lending.

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Small Business CreditThe Small Business Credit Unit has an internal structure that allows for the extensive knowledge of various types of its customers (small businesses, professionals, farmers), ensuring the immediate provision of funding to key sectors of the Greek economy that has been particularly affected by the economic crisis. In 2016, the unit participated in joint initiatives with other Bank units for the improvement and automation of the ap-plication approval processes and the monitoring of its portfolio, with a view to increasing efficiency, improving response times and reducing costs. In 2016, special emphasis was placed on settling loans in arrears, contributing to the restructuring of the portfolio, through the smooth reclassification of sustainable clients into the healthy portfolio.

Business DepositsThe positive change in the country's economic sentiment also contributed to the improvement of business deposits dur-ing 2016. Business deposits in Greece grew by 16% to €9.7 bn. The Bank continues to build on its know-how in partnerships with legal entities in the wider public sector. In 2016, it participated in tender offers for broad collaboration with municipalities, municipal enterprises, prefectures, hospitals, secondary and tertiary education institutions, pension funds, and other legal entities, which resulted in the initiation of a satisfactory number of new collaborations and deposits, the enhancement of its customer base and the significant growth potential for cross-selling. In 2016 the Bank’s Public Sector Unit continued as well to offer innovative products and services to cover the financial needs of the narrow and wider Public Sector entities and of non-profit institutions. Focusing on improving service quality and on using multi-channel services, a broad range of products and services were offered covering all their financial opera-tions (cash management, investments, payroll, automated collection and payment systems, e-banking services, etc.). In 2016 the Unit focused on the needs of the particular customer base developing a comprehensive commercial ap-proach (products, services, multi-channel service, offering the proper tools, remodelling processes), aiming at improving overall customer service experience. Together with other relevant Bank units, in 2016 the unit participated in over 600 tender offers for broad collabo-ration with Legal Entities, ensuring a multitude of new partnerships as well as significant amounts of deposits. All the Bank’s strategic partnerships (collaboration with the Ministry of Foreign Affairs and the Athens Bar Association) were supported and enhanced in the most efficient way. The unit also made a definitive contribution to the Bank’s efforts to attract and manage new public and private sec-tor payrolls as well as adjusting existing customers to the new supervisory framework for such transactions, as set out in Directive (EU) No. 260 on Payment Services.

Business Loans and AdvancesPiraeus Bank Group holds a strong position in business financing in the domestic market, with considerable diversity in all sectors of the economy and emphasis on services to SMEs. At 31.12.2016, total loans to businesses in Greece amounted to €41.5 bn. Business loans are granted, primarily, in the form of credit lines with floating interest rates. In addition, the Group provides letters of credit and guarantees for its customers. It has granted loans to all business sectors, with particular emphasis on commerce, industry, craft industry, construction, energy, infrastructure, tourism, shipping and agricultural production.

Corporate BankingPiraeus Bank Group’s Corporate Banking provides banking services, funding of structured finance transactions, project financing, real estate financing, financial advisory services related to debt restructuring and infrastructure advisory.

Group's Corporate and Structured FinanceThe Group's Structured Finance Unit offers specialized banking services, it organizes and participates in Structured Finance transactions, in the fields of Transportation, Infrastructure, Real Estate, Energy, and Telecoms; and, the provi-sion of advisory services to large infrastructure projects, in Public Private Partnerships (PPPs) and in EU co-funded development projects.

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The key factor that shapes the Group's Structured Finance policy is the creation of added value for the Bank and its customers through the effective management and further development of its portfolio, based on a tailor-made approach for each transaction. Moreover, the unit aims to capitalize on synergies and undertake projects with other Bank units, in the framework of a holistic approach to customer needs. In 2016 the Structured Finance unit took on the planning and management of the "Development Banking" ser-vice. Development Banking is the Bank’s initiative for financing viable investment plans and projects with multiple so-cio-economic benefits and growth prospects, which will constitute the springboard for restarting the Greek economy. The Bank offers the candidate investment projects an integrated, specialized package of loan and/or capital financing solutions, utilizing European financing instruments and consulting services. The new service was welcomed by the do-mestic market, with an important pipeline of investment projects already gathered in the first months of implementation. The aforementioned initiative was included in the Group's Structured Finance business strategy for 2016, which was aligned with the market conditions and moved on the following axes:

• furtherexpansionofportfoliotothefinancingofgreenentrepreneurshipinvestmentstaking into consideration the sector’s optimistic prospects and the multiple economic andsocialbenefits,inthecontextofpromotingagrowthmodelforGreece,adapted to modern international trends and demands,

• pursuitofactiveparticipationinthefinancingoflargeinfrastructureandprivatizationprojects,

• utilizationofalternativeco-fundinginstrumentsintheframeworkofEUprogrammesandmechanisms,

• dynamicmonitoringofexistingstructuredfinanceportfoliocombinedwithassessmentand promotion of restructuring plans,

• utilisationoftheBank’sleadingroletoattractadditionalbusinessinallfinancedprojects.

In this framework, in 2016 the Group's Structured Finance unit extended the financing of investments in important sectors of the economy, such as:

• inRenewableEnergySources,providingtofinanceprojectswithatotalcapacityof200MW,mainlywindandhydroelectricparks,alsoevaluatingtofinanceapplicationsinaportfolioofprojectswithatotalcapacityof180MW,

• intheframeworkofimplementationoftheJESSICAinitiative,incollaborationwiththeEuropeanInvestmentBank,completedthefinancingoffour(4)projectsfortheconstructionandoperationofbiogaspowerplants,whiletheprocessoffinancing ofanadditionalfour(4)projectsinCentralMacedoniaandThessaly,thuscontributingsignificantlytotheutilizationofEUfunds(94%absorption)andthesupport of sustainable investments which strengthen the Greek economy and entrepreneurship on a local-periphery level,

• hassignificantlysupportedthefinancingofmotorwayprojects,withconstructionexpectedtobecompletedin2017,whileasthemainfinanceroftheseprojectsamongotherGreekandforeignbanks,itsupportedallthefundedprojects,buildingonitsknow-how and its leading role, taking all necessary steps to avoid deviations in the construction schedulesandtheconsequencesofdelaysinfinancingbyforeignlenders.

On the basis of the above, in 2016 the Group's Structured Finance unit managed to expand its portfolio of finance, maintaining its high quality, to preserve its customer deposit balances, and at the same time to achieve an overall increase in interest and commission income, which are expected to increase further in 2017.

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Shipping FinancePiraeus Bank has a longstanding presence in loans to the shipping sector, offering a wide and comprehensive range of financial services to Greek shipping companies. The services provided by the Shipping Finance unit mainly focus on financing ship acquisitions (dry bulk cargo ships and tankers), financing the specialized operating needs of shipping companies (issuance of letters of guarantee, work-ing capital financing, cash management, web banking, currency conversions). At the same time, emphasis is placed on the development of additional services and the promotion of all the Bank's products. 2016 was an extremely critical year for the dry cargo industry. Vessel surplus combined with weak demand for international transport resulted in a drop in the dry bulk shipping industry at historically low levels in the first quarter of the year, with the Baltic Dry Index (BDI) hitting a record low of 290 points. After that, the dry cargo industry improved steadily throughout the year, albeit with constant fluctuations and intense nervousness. Uncertainty is expected to con-tinue in 2017 due to the planned number of new ship deliveries and the state of the economy on a global scale. However, the significant decline in new orders and the maintenance of a high scrapping rate brings about a spec of optimism. By contrast, following a very strong 2015 the tanker market moved slightly downward in 2016. During the year there was an increase in delivery of new-build ships and market expectations for a slower oil price recovery than originally expected, which led to a reduction in the chartering of vessels for use as floating storage facilities and the containment of stockpiling, events that had contributed to the market’s strong performance in 2015. The market for 2017 will be deter-mined, inter alia, by the course of oil prices in an intense geopolitical environment. In this context, the Bank's approach remains conservative, focusing on the optimal management of its existing port-folio, improving its quality with selective new financing to existing and new customers. A key strategy remains to pool the portfolio of selected and acclaimed customers, who demonstrate their continued support in all phases of the maritime business cycle.

Medium and Small Business BankingPiraeus specializes in offering banking products and services to Small and Medium Enterprises (SMEs) and has been doing so diligently for almost two decades in Greece. The Bank offers services in both fields of SMEs. Through the spe-cial Small Businesses and Professionals Unit customers with an annual turnover of up to €2.5 mn are supported, while the Bank’s 14 specialized Business Centres provide services across the country to SMEs with an annual turnover ranging from €2.5 mn to €50 mn. The prolonged recession in Greece has significantly affected the growth of SMEs. The slump in demand affected negatively the turnover of the companies, which in conjunction with the limited liquidity and the uncertainty about the economic developments, render the environment unfavourable for business activity. However, accessing the particular market segment creates numerous opportunities for the promotion of new product and services. The Bank’s specialized business centres and its branch network cover all SMEs. By investing heavily in enhancing the know-how of its executives and designing simplified processes and digital solutions to carry out day-to-day operations, the Bank aims to provide high quality service to the specific customer segment. At the same time, compliance with the credit criteria and improved loan quality control are ensured. Finally, the Bank's business centres are also responsible for evaluating requests for companies, the funding applications of which are of a special or complex nature (through Devel-opment Programmes, Greek State guarantees or Joint Ministerial Decisions). The main pillars of the 2016 business objective that incorporate both the commercial strategy and the holistic product development of the Small Business and Professionals segment are the following:

Loans• Emphasisonthesubstantialredesignoftheprocessforsubmittingandcompleting

fundingapplications,takingintoaccountthemarket'sdemandsforspeed,flexibility,innovation, as well as the Bank’s strategic goals.

• Providingtargetedfinancingtohealthybusinessesthroughthespecializednetwork ofSmallBusinessandProfessionalsPartnersoftheBranchNetwork,whilerestraining the average new lending rate and related commissions.

• Creating newfinancinginstrumentsfocusedonmodernbusinessneeds.Inparticular,the newinnovativeproduct"PiraeusEpixeireinWorkingCapitalPOS"combinesfinancial

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liquiditywithPOSterminalsales,providingliquiditytobusinesses24hoursaday,throughall channels (Branch, winbank, ATM).

• Enriching "Green Epixeirein" product line with the newNetMeteringsystemsinstallationfinancingtool.

Products & Services "Packages" - "Solutions 360°"At the end of 2015, Bundled Products under the brand name "Solutions 360°" were launched, targeting sectors of the economy that are on a growth path and share common characteristics and needs.

• ThefirstpilotimplementationwasintheTourismsectorwith"PiraeusTourism360°",which includes products and services that cover the whole range of business needs (deposits, capital movement, loans, consultancy services, insurance products). More than 4,000 enterprises had participated by the end of 2016.

• Thesecondbundle,"PiraeusEpixeirein360°",whichwascompletedin2016,fullycoverstheneedsofbusinessesthathaveincludedtheirinvestmentprojectsintheNSRF2014-2020programmes,offeringconsultingservicesandspecializedfinancinginstrumentsfortheimplementationofinvestmentplans.Atthesametime,liquiditymanagementservicesare provided.

Focusing on improving customer service experience, the main objective for 2017 is to complete a customer-centric model that will assist in applying advanced customer segmentation, based on risk and return characteristics. Through this model, customer trends and behaviours will be analysed in order to create the optimal offer per customer, one that will meet their needs and enhance their value for the Bank.

Development ProgrammesAcknowledging the financing needs of SMEs and given the market difficulties, Piraeus Bank entered a series of strategic partnerships to ensure the smooth and unhindered provision of liquidity to them. The financing instruments to be offered by the Bank were mainly co-funding and risk-sharing tools and financing lines in the form of global loans. In the context of these collaborations, Piraeus Bank has secured financing products in co-operation with the Hellenic Fund for Entrepre-neurship and Development (ETEAN SA), the European Investment Bank (EIB), the European Investment Fund (EIF) and the Hellenic Investment Fund (IfG), as well as the European Bank for Reconstruction and Development (EBRD). Also, in De-cember 2016, the Bank's proposals to the European Investment Fund (EIF) to act as financial intermediary in the COSME Loan Guarantee Facility (LGF) and the Innovfin Guarantee Facility were accepted. The Development Programme Unit is re-sponsible for the creation and management of financing products in co-operation with the aforementioned institutions. The financing instruments provided by the Bank, utilizing its national and international partnerships, are the following:

Business Restart Initiative – ETEAN SACo-funded loans are offered to SMEs of all sectors with particularly favourable interest rates and with a duration relevant to the aim of the financing. All loans are co-financed by Piraeus Bank and ETEAN with equal participation. The loans can be granted either as working capital loans, ranging between €10,000 and €300,000, or loans financing business invest-ment plans, of up to €800,000.

Island Entrepreneurship Initiative – ETEAN SAThis initiative provides low or zero interest-rate financing (for islands with a population of less than 3,100 inhabitants) to businesses that are based on the islands and are active in the field of tourism or in tourism-related services. These loans, ranging from €10,000 to €30,000, cover part of the capital required for the implementation of business plans. ETEAN is the sole provider of the funds, Piraeus Bank is involved in evaluating the selection criteria and managing the financing. In 2016 Piraeus Bank granted loans of approximately €50 mn, as part of this initiative.

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Guarantee Fund – European Investment Bank (EIB)The Guarantee Fund provides financing to SMEs active in processing, commerce and service sectors, with liquidity pro-vided by the EIB. The loans can be given either in the form of working capital or for investment financing with particularly favourable interest rates. The initiative’s total budget amounts to €90 mn, while in the last phase of the programme in the second half of the year, €36.2 mn were disbursed. At the end of the year, ΕΙΒ launched a new programme of €1 bn for SMEs and MidCaps companies. On 22.12.2016, the Bank signed a €100 mn agreement with the EIB aiming to absorb the funds in the first half of 2017.

Trade Finance Facility Programme – European Investment Bank (EIB)The programme is implemented in cooperation with the European Investment Bank (EIB). The EIB provides guarantees to selected foreign correspondent banks to cover their risk for letters of credit and letters of guarantee with an expira-tion date of up to 36 months, issued by Piraeus Bank. This programme enhances the commercial activity of companies that trade with foreign markets. For 2016 Piraeus Bank used €12 mn in guarantees.

Trade Facilitation Programme – European Bank for Reconstruction and Development (EBRD)Through the programme the European Bank for Reconstruction and Development (EBRD) provides guarantees to Piraeus Bank for the promotion of foreign trade (export and import) business operations. This programme is applicable where for-eign banks do not take on the risk of the Issuing Bank. The EBRD provides guarantees to the Confirming Bank, taking the payment risk of international trade transactions undertaken by the Issuing Bank. There are more than 100 Issuing Banks and more than 800 Confirming Banks worldwide participating in the programme. The agreement between Piraeus Bank and EBRD programme was reached at the end of November 2016 and the first transaction was completed in December.

Jeremie Initiative – European Investment Fund (EIF) The JEREMIE Initiative (Joint European Resources for Micro to Medium Enterprises) offers small businesses of all sectors access to co-funded loans with especially favourable interest rates. The loans can be given either in the form of work-ing capital or for investment financing. The size of the funding ranges from €10,000 to €2,000,000 per enterprise. In every financing action Piraeus Bank and EIF participate with equal amounts. The programme ended in 2016, with total disbursements of €45.6 mn of the €50 mn of the Initiative’s total budget.

Hellenic Investment Fund (Institute for Growth - IfG)The loan financing provided by the Hellenic Investment Fund, which is funded by the Greek State and the German devel-opment bank Kreditanstalt f r Wiederaufbau (KfW), in collaboration with Piraeus Bank are aimed at businesses active in the fields of processing, commerce and services. The budget of the initiative for Piraeus Bank was €99.3 mn and these loans include both working capital loans and investment loans with very favourable financing terms.

New Development LawThis is an innovative service, which consists of providing comprehensive advisory services to businesses, to prepare, submit and monitor investment plans for inclusion in the new Investment Law (L. 4399/2016). As part of this service, the Bank assists companies by providing consulting services: complete and reliable informa-tion about the new Development Law, eligibility check for the company and the investment plan, advisory support for choosing the scheme that suits every business, proposal preparation & submission services, development of economic and technical feasibility study in accordance with the terms and requirements of the respective aid scheme, monitoring of the project’s evaluation process with continuous information and guidance of the investor and monitoring and support services throughout the duration of the investment. This service can be combined with lending Banking products, such as a Letter of Intent, Loan to Cover Private Partici-pation or even a loan instead of a grant.

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Integrated Framework Support This is an innovative Piraeus Bank service, which concerns customers who have joined subsidized programmes. The objective is to provide liquidity on preferential terms so that the company successfully completes its investment plan. In addition, the Bank Monitors the compatibility and consistency of expenditure with the technical annexes of the invest-ment plans and mediates the proper payment of the invoices. The Integrated Support Framework includes the issuance of letters of guarantee for the grant advance receipt and the granting of an investment loan with favourable collaterals. At the same time, the Bank, as an intermediary for NSRF 2007-2014 programmes, has undertaken to monitor compliance with the long-term commitments by the enterprises supported under the First National Action Plan (NSRF) Initiative and the Professionals to be completed in 2017.

Restructuring and Management of Troubled Portfolio and Task Force Unit/Merchant BankingManaging the troubled portfolio was one of the Bank's strategic priorities in 2016, with the Non-Core Business & Re-structuring Portfolio developing its high-standard operating model and successfully reducing troubled loans and fulfill-ing related SSM objectives. To this end, the division has enriched the available restructuring programmes with special-ized long-term solutions for businesses and farmers, upgraded its infrastructure and systems to improve performance, response times and tracking (MIS), and strengthened human resources at key positions throughout the country. Taking advantage of the continuous improvements in the operating model and despite the continuation of the ad-verse economic and political conditions, the delay in the changes in the institutional and regulatory framework and the gradual recovery of the Greek economy, the Non-Core Business & Restructuring Portfolio division exceeded its 2016 objectives for SSM and the Bank's BoD, implementing total restructurings of €6.9 bn and reducing NPLs by €1.3 bn (before write-offs). As a result, Piraeus Bank achieved the second best NPLs ratio, compared to the fourth position it held in early 2016. At the same time, the division completed the development of a new model of target-setting and forecasting the course of NPEs for the period 2016-2019, in line with the guidelines provided by the ECB's SSM Framework Regula-tion to all Greek Banks. A new forecast and target mechanism for all kinds of NPEs was developed with the assistance of a specialized consultant, using macroeconomic models, risk indicators and specific actions envisaged in the strategy for each portfolio segment. This target-setting was accompanied by a detail record of strategy and management meth-odology, which is the guide for the Recovery Banking Unit (RBU) teams for 2017.

Task ForceThe Task Force-Merchant Banking (TF) team is RBU's primary channel of communication and cooperation with interna-tional institutional investors (e.g. Private Equity Funds, Hedge Funds, independent servicers, Investment Banks, Insurance Companies and Sovereign Wealth Funds). In 2016, the team focused on initiatives that were strategic to RBU and the Bank in general, aiming at the more effective management of the RBU portfolio in partnership with investors and inde-pendent managers with an international presence and recognized experience in managing troubled exposures. In particular, TF examines the viability and benefits of a possible partnership with one of the major independent NPL and real estate managers in Europe. The aim of this cooperation is to bring to the Bank the know-how and experience that will lead to the optimization of its operational model and the acceleration of achieving its restructuring objectives. At the same time, it will gain access to the secondary market for troubled exposures, which the wider Greek banking system currently lacks, precisely because of the lack of independent managers in the local market. Additionally, TF ex-amines transactions with institutional investors in co-managing portfolios of troubled loans to large corporates. These schemes aim to maximize the Bank's recoveries through the experience of these investors in similar transactions as well as the introduction of liquidity to these companies. The team also looks at structured transactions aimed at the immedi-ate deleveraging of the RBU portfolio. Finally, in 2016 the TF team advised on various of the Bank strategic projects.

Financial and Operating Leasing

Financial Leasing – Piraeus Leasing SA (Piraeus Leases)Piraeus Leasing SA manages the leasing activities of Piraeus Bank in Greece. The size of the portfolio under man-agement, including the operations of Cyprus Leasing SA and CPB Leasing SA, approaches €2.6 bn and corresponds to a 40% market share.

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New production for 2016 amounted to €93 mn, while the leased assets of financial and commercial leasing for Piraeus alone amounted to €992 mn, while for the sum of the managed portfolios it amounted to €2.3 bn. In 2016, the company’s objective was to manage NPLs, which is also one of the Group’s strategic objectives. Net Interest Income of Piraeus Leasing settled at €6.8 mn in 2016 from €9.6 mn the previous year (-29%), net revenues at €13.2 mn from €14.6 mn (-10%) and profits before tax and provisions amounted to €7.0 mn from €8.3 mn (-15%). In particular, the active management of the recovered property and its commercial exploitation in 2016, led to a 32% increase in commercial lease income to €4.0 mn from €3.0 mn in 2015. An increase of new production is budgeted for 2017 and a corresponding improvement of results, while the inten-sive and effective management of the NPL and recovered assets portfolios will continue.

Operating Leases – Olympic Commercial And Tourist Enterprises S.A. (AVIS)Olympic Commercial and Tourist Enterprises SA operates under the AVIS Rent a Car, Budget Rent a Car and Payless Car Rental trademarks and is active in short and long-term vehicle leasing, as well as sale of used cars. Despite the great crisis the automobile sector faced in Greece from increased taxation, the company still has the largest market share in long-term leasing. The total company fleet at the end of 2016 reached 31,400 vehicles. The company posted a rise in turnover from long-term rentals, as new car orders were up 29%, while turnover from short-term rentals increased by 15%. In 2016 the company purchased 8,600 new cars, 11% of car registrations for 2016, while passenger car sales increased by 14%. In 2016, the company’s turnover increased to €152.5 mn, while it posted a significant increase in profits of 46%, as earnings before tax amounted to €19.4 mn, compared to €13.3 mn in 2015. In 2016, the company invested €7 mn in infrastructure and technologies for restructuring its network and continuous improvement of its services, while its overall investment plan and the modernization of its fleet exceeded €160 mn. According to the most recently published data, the company is the largest in the car rental sector in terms of the number of vehicles it owns, as well as turnover from all rentals. In the first quarter of 2017 the company was classified as discontinued, in line with Piraeus Bank's Restructuring Plan.

Business FactoringPiraeus Factoring SA, a wholly-owned subsidiary of Piraeus Bank, was founded in 1998 and is a member of Factors Chain International (FCI), with partnerships with the leading factoring companies abroad, which are subsidiaries of Banks. It is also a member of the Hellenic Factors Association, with representation both on its BoD and its individual Committees. Piraeus Factoring SA provides the full range of import and export factoring services to businesses by financing their accounts receivables, ensuring the efficient management and ongoing assessment of the solvency of existing or new ventures and providing credit risk insurance coverage. Piraeus Factoring SA aims to increase its profitability and market share in 2017, by developing existing and new products and maintaining a low rate of bad debts (4.2%). Its goals will be achieved by supporting economically sound and dynamic businesses that will contribute to the growth of the Greek economy and the creation of new jobs through their exports. In 2016 accounts receivable subject to factoring amounted to €1.8 bn and financing to €1.2 bn from €1.0 bn in 2015, up 28%. Total Assets in 2016 amounted to €277.7 mn from €222.4 mn in 2015 up 25% and shareholders’ equity amounted to €37.1 mn from €30.7 mn in 2015, up 21%. Turnover in 2016 stood at €21.1 mn from €19.6 mn in 2015, up 8%, profit before tax in 2016 stood at €9.1 mn from €7.6 mn in 2015, up 20%.

Group Digital Banking

winbank2016 was a crucial year for winbank as the web service was radically redesigned and split into winbank for Individuals and winbank for Business, to cover the specific needs of specific customer groups. The new winbank is now the first fully responsive e-banking service in Greece, i.e. its content can be updated accord-ing to the screen used by the customer. This means that it is accessible from all devices (computers, tablets, smartphones - iOS & Android) without discounting functionality and user friendliness. In this way, the customer has a unique winbank

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experience regardless of the device used, and at the same time has access to the full winbank functionality even from mobile devices. The redesign of winbank platform has not stopped the ongoing effort to improve customer service. Functionality improved substantially through a significant number of improvements, the main ones being:

• Capability to register at winbank without the need to visit a branch, through the use of powerful remote customer authentication keys.

• Support for IRIS online payments, accelerating money transfer to other banks. Through this service, sending money to another Greek bank can be completed within minutes.

• New debt payments were added, covering customers' need for easy, 24/7 payment of their debts

• Support for the new loyalty programme (yellow), whereby customers can register online via winbank and monitor their use.

• Enhancement of business information provided to businesses.• Managemoneytransfers-remittancestootherbanks.

Piraeus Bank, true to the continuous improvement of customer services, certified winbank for the 13th consecutive year according to ISO 9001:2008.

winbank web banking 34% increase in average monthly active users

50% increase in average monthly cash transactions

winbank phone banking 50% increase in active users

58% increase in cash transactions

winbank mobile banking 48% increase in active users

128% increase in cash transactions

Group Digital Banking Selected Indicators 2016

The following percentage of total Bank transactions per category was made through the Bank’s electronic channels (web/mobile/ATM/APS):

Payments of Bills 55%

Transfers/Remittances 78%

Withdrawals 86%

Deposits 34%

Passbook Update 40%

Total 67%

AwardsIn 2016, winbank e-banking and mobile apps received significant distinctions and awards both in Greece and abroad.

Cyta Mobile Excellence Awards • onetouchforwinbankmobilebankingApp:SILVERawardinMobileAppUsability.• winbankwallet:GOLDawardinMobileWallet.• Check in Class: GOLD award in Mobile Sales/Promotions Services Applications.

Global Finance Awards • BestConsumerDigitalBankinWesternEurope.

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Business IT Excellence (ΒΙΤΕ) Awards • onetouchforwinbankmobilebankingApp:BRONZEawardinMobility&Mobile

Applications. • winbank Private Banking App: SILVER award in Banks/Insurance Companies.

Lighthouse E-volution Awards: The redesigned winbank won:

• SILVER award in webpage Redesign• SILVER award in Innovative Bank services• GOLDawardinUsability&UXOptimization• GOLD award in Mobile Banking • GOLD award in Design – Aesthetics

winbank Web BankingThe average monthly number of new registered web-banking users in 2016 was 21,000. The average monthly number of active users increased by 34% since 2015, and the average monthly volume of money transactions by 50%. The aver-age monthly volume of money transactions per user increased by 7%.

winbank Phone BankingThe average number of new registered phone banking users increased in 2016 was 25,000. Active users increased by 50% since 2015 and money transactions by 58%.

Payments Through winbank Web Banking and www.easypay.grIn 2016, payments for public utilities and bills through winbank and easypay increased by 52% compared to 2015, while the penetration of e-payments in the Bank reached 46%, posting a 20% increase compared to 2015. It is worth men-tioning that 995 payments are available through winbank web-banking and www.easypay.gr.

winbank Mobile BankingActive mobile banking users increased significantly by 48%, with a 128% increase in the volume of money transactions. In addition, approximately 110,000 users activated the quick login functionality, resulting in an increase in the use of mobile banking by 63%, since it is estimated that this functionality helped the increase of average logins from 8 to 13 per month.

"Instant Cash" winbank ServiceThe innovative "Instant Cash" service (web/phone/mobile/ATM cash transfer and cash withdrawal without a card from an ATM) continued its upward course in 2016. Approximately 95,000 Bank customers used the service, resulting in a total increase of 64% in the volume of transactions compared to 2015, with the amounts transferred exceeding €42 mn.

Piraeus Direct ServicesPiraeus Direct Services (PDS) aims to provide services to the Group’s customers and associates through all available distribu-tion channels. PDS’s main target is to provide the Bank with quality and innovative services to improve communication with its customers. In 2016 the company supported various of the Bank’s initiatives. Indicatively:

• The new winbank site for individuals and businesses.• Support to newservices:Yellow,RemoteRegistration,winbankwallet,MyBank,

BankinOffice,Key2Business,DevelopmentBankingprogramme,IrisPayments,Easypay.

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• Outgoing call campaign for installing POS terminals to partnering merchants. SettingupofgroupandspecialPOSterminalnetwork&merchantline.

• Creation of a special service line for Small Businesses and Professionals.• Servicingthe"Agro-carta"incooperationwiththeBranchNetworkandcreation

of a special card activation line for the Branches.• Completion of the migration of previous Geniki bank cards to Piraeus Bank systems.• Cross-selling of insurance products.

At the same time, PDS supported the mechanism for recording customer satisfaction in Retail Banking by placing a number of phone calls to customers, as soon as they completed a transaction or purchase of a product/service, thereby capturing the client's "experience" immediately after his interaction with the Bank (Voice of the Customer). It also sup-ported the Bank's communication with its customers, carrying out a variety of informative and promotional campaigns. In order to respond to the increase of incoming calls (+6% compared to 2015), PDS stepped up the response and support teams. It has made a special effort to improve customer service and satisfaction indicators across all service channels. For these reasons, emphasis was placed on the training and development of people, as well as the enhancement of the company’s IT infrastructure. The quantitative indicators improved significantly over the previous year and would have been even better if there had not been a huge number of calls in the last weeks of the last four months of 2016, due to massive public sector dues settlements via Web and Phone Banking. More specifically, the indicators were as follows:

• 68% of the calls were answered within 20 seconds compared to 54% in 2015.• Average speed of answer was reduced to 43 seconds from 82 seconds in 2015.

Despite the increased number of calls, the quality indicators remained high, e.g. credit card retention (76%) and customer satisfaction (86%). Finally, in the context of the uninterrupted and immediate continuation of business as usual, the creation of the Dis-aster Recovery Data Centre was completed, and the transition of business for one weekend was carried out successfully.

Self-Service BankingIn 2016, improvements were made to the Bank's ATMs, to extend and upgrade the services provided. The most important improvements were:

• Instant activation of prepaid Social Solidarity Income Cards provided by the state tofinanciallyweakfellowcitizens.

• Support of the Bank’s new loyalty programme (yellows) enabling customers to be informed about their balance in yellows.

• Support of the Bank's new recycling ATMs.

At the same time, the effort of extending services provided by easypay kiosks continued:

• Optionforpayingbillsbycard,increasingthecustomer'soptionsforsettlinghisdebtsthrough the easypay kiosks and simplifying the whole process.

• Instant issuance and charging of prepaid gift cards with pickup from the easypay kiosk.

The Bank's self-service machines, with their wide functionality, are an important and integral part of the Bank's e-branch equipment, which started operating in 2016.

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e-branchAt the end of 2016, Piraeus Bank was the first to launch into the Greek market a new model of a fully automated e-branch offering a range of full-service banking transactions, in three locations in the region of Attica. The first e-branch, located in Ampelokipi opened for the public in early December, while the other two opened a month later in Chalandri and Spata (McArthurGlen Athens Designer Outlet Shopping Centre), respectively. The Bank's objective is to create "Modern Banking Experience" Branches to better serve its customers and improve their overall experience through the provision of innovative services. Combining in a unique way modern architecture and technological innovations, it designed and implemented a friendly, familiar and modern environment that provides smart banking services and transactions. The new branches have extended operating hours on weekdays and on Satur-days, confirming once again the high-quality service and the customer-centred character Piraeus Bank has been showing for many years, offering a significant competitive advantage. Inside the e-branch individuals as well as businesses and professionals can perform their transactions with security, speed and simplicity, since no special knowledge or digital skills are required. Facilitators (branch staff) are available dur-ing operating hours to assist with customers’ queries, to provide information about the services provided and instructions on how to use the Bank’s machines & digital services, as well as assistance in every transaction. The main piece in technology development and flagship of the e-branch, is the "Remote Cashier", a VTM (Video Teller Machine), which is a customer interaction model that facilitates all banking, with customers feeling exactly the same service experience.

AΤΜAt the end of 2016, Piraeus Bank Group’s ATM network in Greece amounted to 1,880 machines, out of which 796 were installed within branches of the Bank and 1,084 in points outside the branch network, making it the largest ATM network in Greece, with a market share exceeding 34%. In 2016, the ATM network supported 86% of the Bank’s cash withdraw-als and 14% of the total deposit transactions. In the second quarter of the year, the "Piraeus free Wi-Fi" service was activated in over 1,300 ATMs, and was warmly welcomed by the public, showing ever-increasing use.

easypay KiosksEasypay kiosks are one of the Bank’s important service channels, with a market share of 41%. There are 563 easypay kiosks installed within the branch network and outside, with extended opening hours and access for the public. Transac-tions in the kiosks increased by 4% compared to 2015; 20% of deposit inflows, 34% of credit card payments, 21% of loan payments and 40% of bankbook updates were conducted in the kiosks, proving that they significantly contribute to the discharge of branch cashier desks, apart from providing speedier customer service.

Green Banking

The Path Towards Green BankingIn 2016, even though political and social developments in Greece prolonged economic uncertainty, Greece's commitments to the EU guidelines brought about further changes in the legislative and regulatory framework affecting several areas of sustainable development, such as Renewable Energy Sources (RES), energy savings in buildings (private and business), the agricultural world (through subsidies), the tourism industry, etc. New standards are introduced in many of these sectors, such as the new Electricity Market model, where the supervisory framework adapts to the particularities of each technol-ogy and to their market penetration. This model will work within the framework of the energy union promoted by the European Commission in recent years to defend the long-term economic interests of the Member States and to pursue the path towards sustainable development. By means of Community directives, specific environmentally-friendly and socially sensitive policies are promoted for the Member States, modifying their respective supervisory framework accordingly. Through Green Banking, Piraeus Bank follows developments in the energy sector, which is the most important part of the Group's green portfolio, and in all areas contributing to the sustainable development model. The areas actively promoted by the Bank since 2009 are RES, energy saving, proper water and waste management, organic farming, agro-tourism, ecotourism, green transport and green chemistry. Green Banking is committed to the creation and modernization of loan products, the financial and technical assess-ment of the sustainability of investment projects, the gradual inclusion in corporate lending processes of business loans

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from the environmental and social management system and the monitoring and reporting of the green loan portfolio.

Green Banking and MarketGreen Products and ServicesThe Group's specialized green products and services aim to serve the aforementioned sectors and aim at promoting clean technologies to serve investment options for business and private customers. Following the modification in the supervisory framework for RES electricity generation in 2015 and the substan-tial market restart after the period 2012-2014, when there was a suspension of licensing of new photovoltaic projects, Green Banking proceeded to the creation and modernization of existing and new loan products. Under the umbrella of the "Piraeus Green Business" group, whereby Small and Medium Businesses and Professionals are funded with favour-able conditions and flexible processes, another "green energy" product has been added, "Piraeus Green Net Metering". The new product highlights the benefits of energy autonomy and pushes businesses towards environmentally friendly choices, such as installing photovoltaic systems, aiming to offset the electricity they produce with what they consume. "Pi-raeus Green Business", also includes the loan product "Energy Upgrade" since 2015. This product aims to create favour-able conditions for energy upgrade of business facilities. Along with the renewal of the equipment, businesses benefit from a reduction in their operating expenses and from the comfort created in their space, while applying environment-friendly practices. Thus, despite the unfavourable economic sentiment in Greece, the Bank has remained on the path of supporting green entrepreneurship, especially RES projects. In addition to green products for Small and Medium Businesses and Pro-fessionals, in 2016 high-power capital intensive projects were funded, with emphasis on wind energy. These projects were evaluated on their individual characteristics, for the Bank to provide the businesses with the appropriate financial instruments. With regard to energy-conservation, in 2016 the Ministry of the Environment and Energy published additional deci-sions for inclusion in the "Energy Efficiency at Household Buildings" programme. As a result of the new decisions, the Bank handled approximately 3,500 customer applications out of a total of 8,500 applications. This allowed additional energy saving projects to be carried out in household buildings additional to the 13,000 customers who had been funded until the programme ended in late 2015. It is important to note that the Bank continues to provide Green Loans to Indi-viduals on favourable terms, so that they can cover the energy needs of their household buildings (construction and/or installation of equipment), irrespective of the subsidized programmes. In 2016 particular emphasis was placed on the green services provided by the Group through its subsidiaries in Greece (Centre of Sustainable Entrepreneurship Excelixi SA and ETVA Industrial Parks SA). Advisory services on envi-ronmental management system, EMAS, ISO 14001 & Green Key certifications, as well as energy efficiency, carbon foot-print, waste and water management, were offered by Green Banking, with the participation of the Branch Network and the Group’s subsidiaries. Green services provide businesses with the ability to monitor and record their environmental impacts as a result of their activity. They show ways to improve business operations while offering multiple benefits such as protecting the environment by reducing their carbon footprint, reducing their operating expenses by upgrading equip-ment or improved management of their operations, enhancing reputation, etc. Businesses bearing these certifications have a further competitive advantage, since the European model increasingly imposes certification of products and services.

Results – Green PortfolioPiraeus Bank has adopted a detailed monitoring process of its green portfolio, and marks regularly its positive contribu-tion to sustainable growth. The goal of Green Banking Operations is to inform all interested parties continuously regard-ing the quantitative and qualitative data of the portfolio and its operation in the most transparent way. At the same time, the accuracy of data is ensured through audits by independent certified bodies. At the end of 2016, Piraeus Bank Group approved limits exceeding €1.7 bn, demonstrating its strong commitment to financing new green business projects with an emphasis on RES, providing funding from the early stages of the invest-ment plan up until completion. The total number of green customers (private and business) funded increased 12% since 2015 to over 23,000 at the end of 2016, highlighting its effort to support a number of businesses and individuals rather than individual cases. At the end of 2016, active loans outstanding of the green portfolio stood at €1.05 bn, retaining its qualitative characteristics for another year. More specifically, by the end of 2016, approximately 20,700 individuals, with outstanding loans of more than €82.5 mn, were financed by the Bank in order to realise their investment. Most of them have installed more than 4,300 roof-mounted photovoltaic systems (€56 mn). However, the majority of private customers come from the "Energy Efficiency at

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Household Buildings" programme, which was concluded in 2015. In 2016, and following the inclusion of additional benefi-ciaries in the programme by the Ministry of Environment and Energy, approximately 2,500 individuals implemented build-ing interventions in their homes so as to reduce their energy needs. During a difficult financial period (2011-2016), the Bank supported more than 15,500 beneficiaries in their effort to upgrade the energy efficiency levels of their households and thereby reduce expenses in their household budget through bank lending. The majority of the beneficiaries belonged to lower income ranges (with personal income less than €12,000 or a family income less than €20,000 per annum). With regard to the additional cases included in 2016, Piraeus Bank selected 3,500 applications as initially eligible, with a total budget of €40 mn. In total, Piraeus Bank accounted for 41% of the aggregate entries/participations in the programme. In total, until the end of 2016, 2,650 companies were financed by the Group to implement their green entrepre-neurship projects. Green financing to businesses by the units of Small Business, Business Centres, Large Businesses and Piraeus Leasing exceeded €932 mn, corresponding to 89% of the green portfolio. The largest part of loans was allocated to RES projects. The total capacity of projects financed by Piraeus Bank (including those already repaid) at the end of 2016, amounted to 1,017 MW, making up for a 19.4% market share of the total installed capacity from RES in Greece. Specifically, more than 7,600 photovoltaic systems of total capacity 535MW have been financed until the end of 2016, with the majority of them being up to 100KW. Financing of wind parks was also noteworthy, reaching a total ca-pacity of 405MW, or 17.1% of total wind parks operating in Greece, with active loan balances reaching €256 mn at the end of 2016. The Bank has also financed 20 small hydro-electric stations, with active loan balances reaching €69 mn. Finally, the Bank financed biomass/biogas projects with €47 mn, generating a total capacity of 19MW. The total capacity of RES projects that have been funded by Piraeus Bank averted the annual emission of 2.1 million tons of CO

2 into the atmosphere, a quantity that would require 159 million trees for its absorption.

Capacity from Financed RES (MW) 1,017 975 4%

Prevented CO2 Emissions (thousand tonnes)* 2,120 1,967** 8%

Green Financing Limits (€ bn) 1.31 1.28 2%

Green Financing Balances (€ bn) 0.95 0.96 -1%

Res Project Figures 2016 2015 Change

* The calculations for the CO2 amount prevented from being emitted due to the funding of Piraeus Bank Group,

are based on the average CO2 emission coefficient, the conventional Greek power generation and the average

annual power generation per RES technology, according to the latest published data of LAGIE (Operator of Electricity Market).** The amount of CO

2 emission that was prevented was revised for 2015. The change is due to the update

of the CO2 emission coefficient for substituting fossil fuel.

Green InvestmentsIn 2016 the contract for the financing of a biogas project in Thessaly was signed under the JESSICA initiative. The project concerns the construction and operation of electricity and thermal energy biogas biomass power plant of a 1.5 MWe capacity in the Municipality of Farsala. This project is added to the 5 additional projects for which contracts have already been signed during the previous years in Central Macedonia and Thessaly with a total capacity of 9.2 MWe. In addition, a contract was signed in 2016, once again under the JESSICA initiative, to finance a project undertaken by the Municipality of Thessaloniki for the energy upgrade of the street lighting system on selected roads and parks, so as to improve the energy management of the electricity network and reduce the Municipality's energy expenses, while at the same time improve the urban landscape, through aesthetically upgrading areas and road axes. Piraeus Bank manages €40 mn of JESSICA funds ("Joint European Support for Sustainable Investment in City Areas") to finance urban development projects in its capacity as an Urban Development Fund (TAA) for the Central Macedonia and Thessaly regions. In addition, Piraeus Bank co-finances the projects with €16.8 mn from its own resources and/or other private resources. Finally, the Hellenic Fund for Sustainable Development, a venture capital fund, is a wholly-owned subsidiary of ETVA, one of Piraeus Bank Group’s subsidiaries. Its aim is to facilitate entrepreneurs by covering their participation in new investment proposals related to sustainable development (RES production, waste treatment and utilization, etc.), using measurable social contribution and environmental indicators, thus participating in the growth of the Greek economy on a stable basis.

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Project SupportIn order to offer the best possible service to the Bank’s customers, Green Banking operations focused on supporting the Bank’s network and central units.

Financial Sustainability Assessment and Implementation of the Environmental and Social Management System in Business FinancingOne of the main pillars of the Green Banking unit is the financial and technical sustainability assessment of projects in all sectors of green entrepreneurship. The green experts team assesses the new projects, closely scrutinizing the proposed technology, the experience of the installer, the dimensions and estimated productivity of the project. In addition, the vi-ability of the projects is considered, taking into account a variety of parameters, while the licensing process is monitored throughout the investment, in accordance with national legislation and European standards. The financial and technical sustainability assessment has been extended to re-evaluate projects that have already been funded. During the annual revision of lending limits, Green Banking also reviews the projects to ensure the con-tinued and uninterrupted operation of the installed equipment and its productivity. The ultimate goal of sustainability assessment at this stage is to prevent any failures in the operation of the projects, protecting both the customer and the Bank. The total number of green projects that have been evaluated by Green Banking at any stage of their implementa-tion reaches 4,000. The staffing of the Green Banking unit combined with years of experience in financing projects with a positive en-vironmental impact has been the comparative advantage for the immediate adoption of the Environmental and Social Management System (ESMS). ESMS includes the existing Environmental Management System related to the risks that may arise from the Bank’s internal operation - certified under EMAS & ISO 14001 in 2011, and the Environmental and Social Risk Management System for risks that may arise from the business activities of its funded customers. In line with the "ESMS Policy" adopted by the Bank's Executive Committee, the Group's Credit Policy has been amend-ed and Business Credit Criteria have been enriched with new Environmental and Social Criteria. At the same time, in 2016 the Group's Environmental Policy Review was launched. As part of the design and implementation of the ESMS, specific parameters relating to the assessment and management of the environmental and social risk of any business financing are gradually included into the existing loan approval process-es, and will be followed in examining any new or existing business financing, based on Group Credit Policy and the relevant International Standards. In 2016 the necessary modifications were made to the Bank's IT systems to automate checks. The implementation of the ESMS includes the adoption by the Bank of a list of excluded activities, a due diligence on the environment, health, safety and society, in accordance with the national supervisory framework and, in some cases, with the International Standards, and finally a draft of corrective action plan were required by a specific imple-mentation timetable. The Bank monitors and evaluates on a regular basis the environmental and social performance of funded projects, businesses and organizations. In line with the general standards of a management system’s operation and governance, in 2016 the Bank appointed the Group ESMS Officer and the Group ESMS Coordinator to coordinate the implementation of the system in Greece and in subsidiaries abroad, and will set up a Steering Committee and a Working Group for the programme’s immediate im-plementation. In order to monitor the business portfolio’s environmental and social risk and to ensure the system’s proper, efficient and optimal operation, the results (qualitative and quantitative) will be recorded at regular intervals in order to draw the necessary conclusions.

Collaborations and ParticipationsGreen Banking has actively participated in meetings, conferences and scientific research covering the whole spectrum of green entrepreneurship, so as to maintain open communication with market players, inform the investors about the Bank's products and services, and inform executives about new technologies and changes to the supervisory framework. By way of example, in 2016 Green Banking participated in:

• TheBIOFACH2016exhibitioninNuremberg,Germany,wheremeetingswereheld with investors and companies active in the organic and responsible agriculture sector both in Greece and internationally. At the same time, as part of BIOFACH, Green Banking attendedthe4-dayInternationalConferenceonOrganicAgricultureandAlternative

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Development of the Countryside at the International Level.• TheUNEPFIGroup,whichisresponsibleforcreating"PositiveImpactPrinciples".

Itsmainobjectiveistofundprojectswithapositiveimpactonsociety.• Gaia Business conference on the developments in the agriculture sector, the New CAP

and its environmentally friendly approaches, and participation in the Copa Copega meeting in Greece.

• TheTravelifeSeminarforthecertificationofalternativetourismservices.• Food for Business –Pitching event of "Innovathens– Innovation and Entrepreneurship

in the Technology of the Municipality of Athens", where business opportunities connected to and supported by the implementation of new technologies and innovation were presented for the agri-food industry.

• WorldSustainableTourismCouncilinBerlin,themainobjectiveofwhichistopromotesustainable tourism at a global level.

• ColloquiaorganizedbytheCentreforRenewableEnergySources(CRES)andtheInstituteof Agricultural Sciences on the use of biomass as a driving force for market development andthestandardizationandcertificationofoliveoilrespectively.

• The Greek-French Innovation and Entrepreneurship Forum.

In addition, workshops were organized with local operators and entrepreneurs, in cooperation with local chambers and municipalities, to support one of the most dynamic sectors in the country, Tourism, so as to present the opportunities offered through the Bank’s products and services. For example, Green Banking executives participated in workshops:

• TheChamberofEviaincooperationwiththeUnionofHoteliersofEvia.• The Professional Association of Aegina in cooperation with the Municipality.• The Chamber of Commerce of Thassos in cooperation with the Municipality.

Green Banking AdvisorThe Green Banking Advisor has been present in the Branch Network since 2010 and for yet another year was the direct link with the Bank's customer base, providing information about the opportunities offered by the Group in these fields. The Advisors participated in events and workshops organized by institutional bodies as well as by the local business com-munity, aiming at their direct information on issues related to green entrepreneurship and, above all, supporting the local market in this approach.

TrainingFor Piraeus Bank staff training on environmental and social issues is a key factor in supporting green entrepreneurship and maintaining its healthy portfolio, and thus training was provided to specific executives. Particular emphasis was placed on training the Branch Development Partners in the Branch Network to fully serve the needs of green business enthusiasts, informing them about the choices amongst the Group’s green products and services. More specifically, in addition to 19 days of classroom training, a Green Banking executive visited 33 Partners throughout the Bank’s branch network in Greece, offering targeted on-the-job training. The main purpose was to strengthen their knowledge of green entrepreneurship and to familiarize the partners with the products and services provided. A total of 103 man-hours of training were recorded. Additionally, for the wider dissemination of information, unit executives participated in the training of Small Business & Professional Associates at the Network Branches. The training material for the associates included information about the opportunities created by the modifications of the supervisory framework in the areas of interest, their connection with the Group’s green products and services and the benefits for the Bank's customers. A total of 51 employees at-tended the module with 1,632 man-hours of training. In addition to the Bank's Branch Network's partners, Business Centres managing larger portfolios were also informed of the opportunities. The purpose of these meetings is to provide uniform information to all those serving customers regarding investment opportunities, the services provided by the Group to cover these investments, as well as the spe-

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cial funding framework for the Green entrepreneurship sectors. A total of 105 employees attended the module with 365 man-hours of training. In 2016 special seminar cycles were designed for the implementation of the ESMS. The seminars were considered necessary to train senior executives who are responsible for supervising and coordinating the business lending process on the new policies and processes required by ESMS, as well as on the modifications made to the Bank's systems. Senior executives of the Group’s subsidiaries, in Greece and abroad, were also informed about the new ESMS requirements, in order to co-ordinate the work of integrating the system into the subsidiaries. Thus, a total of 62 executives received 372 man-hours of ESMS-related training. Finally, e-learning seminars on environmental issues and issues of green entrepreneurship continued. Thus, 20 more participants had 195 man-hours of training.

InternetFor the fourth consecutive year Piraeus Bank supported an innovative internet communication channel, the Green Bank-ing Portal (www.greenbanking.gr). Through the website, leading environmental companies and not only have the op-portunity to promote their products/services and their good practices, strengthening their market position. In addition, the portal is a training tool on the basic concepts of green entrepreneurship, aimed at informing and raising awareness on environmental issues. Following Green Banking's concerted actions, businesses that were posted on the portal at the end of 2016 were 60% more than those at the end of 2015. The presence of Green Banking on social networking sites, such as facebook, twitter, youtube and flickr, continued for the sixth consecutive year. The Bank thus demonstrates its strong will to keep open another window of communica-tion with society to inform the public on environmental and social issues. More specifically, in 2016, emphasis was placed on issues of biodiversity, climate change, environmental social initiatives and innovative ideas for green entrepreneur-ship. At the end of 2016, more than 32,000 "Think Green" friends from Greece and abroad followed 483 related face-book posts. Similarly, on twitter the followers remain above 1,000 with the relevant page tweets rising to 350.

Agricultural Banking

The Agricultural Sector at the Heart of the BankPiraeus Bank, as the leading bank of the agricultural sector, has strategically chosen an integrated approach to providing banking services and financing of the agrofood sector, encouraging the creation of synergies and supporting entrepre-neurship in all agrofood chain, from the producer and his suppliers of goods and services to the businesses and the co-operatives that process, trade and export the agricultural produce. Piraeus Bank provides targeted financing and quality services of high added value to every link of the chain as well as solutions to all its customers.

New Products & Operational FrameworkBy financing the agricultural sector, the Bank aims to - in addition to the provision of liquidity - contribute to solving the sector’s significant longstanding structural problems. In this context, the Bank designed and offered a range of new products and services. In particular, Piraeus Bank issued the Agro-carta and provided liquidity on time to tens of thousands of producers in the first cultivation period of 2016, a transitional period for the implementation of the new common agricultural policy and the new structure of direct payments, enabling early partial payment of these payments to farmers to cover their short-term needs. At the same time, in order to better serve the farmers’ investment needs, it offered leasing facilities through its subsidiary Piraeus Leasing, covering the needs for fixed assets, such as agricultural cars, tractors, collectors, milking machines, etc., and taking into account the real needs of farmers based on the capacity of their farms and the seasonality of their cash flows, and providing for the most appropriate repayment terms. In addition, in order to smoothly implement the investment plans under the Rural Development Programme, the Bank has developed a comprehensive package of solutions, which includes, besides the investment loan, the Letter of Guaran-tee and the loan instead of a grant, so that there is a total coverage of the needs for timely completion of the investment. In addition, in cooperation with the Group’s subsidiaries, the Bank focused on creating comprehensive specialized bancassurance products for farmers and presented in cooperation with ATE Insurance, member of ERGO Group, the new crop insurance product, "Safe Agricultural Production". It is a complete product for farmers that provides insurance coverage and privileges for their entire business.

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Finally, the Bank continued to support agricultural producers by enabling them to cope with extraordinary production problems and continue the smooth repayment of their obligations.

Contract FarmingThe "Contract Farming & Livestock Breeding" programme has been in operation for four years and is an integrated bank-ing model of targeted financing and coordination of commercial/processing businesses and of individual farmers/livestock breeders with a clear footprint in the country's agricultural economy. This form of financing is a comprehensive proposal for servicing the agri-food sector, which contributes to the creation of synergies between the parties involved, while at the same time helping to rationalize agricultural production, modernize the trading circuit and create an expanded retail network for agri-food, supporting the development of local markets. The programme’s success is evident given the increase in the number of commercial enterprises/cooperatives/pro-ducer groups from all over the country participating in it, as well as its extension to other sectors of the economy, such as fisheries. Through its development and extension, the Contract programme further enhances its support to the country's rural sector and to the Greek economy in general, as it contributes to the extroversion of Greek enterprises, to stimulating employment in rural areas, to enhancing the sustainability of industries of the rural economy with an important contribu-tion to maintaining the country’s social structure in remote island regions as well as in exploiting its natural wealth. In 2016, following market trends and needs, the Bank enriched the programme with additional opportunities for producers, such as covering the labour costs through the possibility of buying out insurance coverage and paying premi-ums for their agricultural production, their farm equipment and agricultural machinery. Also, in 2016, through the extended Contract Farming programme, the Bank carried out its next step, which concerns the holistic approach to the value chain of the Greek agri-food sector, by financing both production cost factors and those related to distribution and retail sale of products. More specifically, Piraeus Bank, capitalizing on its accumulated know-how, which it develops on a daily basis, rec-ognized the need to intervene in the agri-food chain and implemented its next step in the field of agri-food. With the Contract Banking Agribusiness Scheme, the Bank is expanding its integrated approach to the agri-food value chain. In order to contribute to the reduction of agricultural production costs, the Bank financially supports agricultural supplies stores with working capital and further develops the range of services and products it offers to support the agricultural and agri-food sector. The basic philosophy of the programme is to enhance the liquidity of agricultural supplies stores, in order for them to be able to pay for the necessary supplies from wholesalers in cash, thereby achieving the maximum possible discount, part of which is passed on to producers. Furthermore, in the context of the extended Contract Banking Programme, in 2016 the Bank implemented the sec-toral link between the primary sector and the hotel industry. The Bank financed hotels to purchase, on contract, certi-fied Greek products from companies and cooperatives participating in the Contract Farming & Livestock Breeding pro-gramme, contributing to the promotion of products to tourists visiting our country. In this way, it enhances the export orientation of the agricultural sector and provides support to exporting businesses.

Support Actions of Agricultural BodiesThe cooperation between the Bank and institutions of the agricultural sector continued successfully in 2016. A range of significant and value-added products and services was offered to agricultural institutions/organisations, agricultural cooperatives and businesses involved in agriculture. The Bank has developed and offers a full range of specialized services and transactions for farmers and other busi-nesses involved in agriculture through its extensive branch network and centrally. In particular, for services relating to the payment of Communal Agricultural Aid and State aid to producers and enter-prises, the Bank is certified through the Quality Management System under the EN ISO 9001:2008. The certification was renewed in 2016, satisfying the quantitative and qualitative evaluation criteria set at the inspection by the competent body. The same certification was also renewed for the payment service of the Early Retirement Programme for Farmers, which the Bank manages on behalf of the Ministry of Rural Development and Food. The Bank remains the leader in the agricultural payment service and is the only bank in Greece certified to dispense subsidies to producers, proving that it is specialized in the provision of high quality services both to the paying institutions and to their beneficiaries. The Bank’s role in making aid payments is crucial for the correct and rapid service of producers, agricultural busi-nesses and all parties involved in the process.

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Throughout the year, a large number of payments were successfully executed for Pillar I direct payments and for Pillar II measures of the Common Agricultural Policy, with substantial amounts being directed to basic and green aid and to actions for young farmers, modernization of farms, the transition to organic farming, agro-environmental aid, etc. Payments of Community and State aid, which were carried out smoothly and successfully in 2016 in the whole rural world, amounted to a total of €3.6 bn. Funding by the Bank to the Special Guarantee Account for Agricultural Products amounting to €2.8 bn was crucial for the timely payment of aid to beneficiaries. With the main objective of serving the needs of the rural world and providing high quality products and services, the Bank continues to support the primary sector of the Greek economy and to prioritize its development.

Actions and InitiativesIn addition to financial support, the Bank provides multi-faceted support to farmers. The Bank's modern perception of integrated support for farmers is implemented through the Entrepreneurship Centres, which operate in areas with sig-nificant farming activity. The centres are in a position to offer thorough information about specialized banking products that cover the needs of producers for financing, as well as about their opportunity to make use of co-funded programmes both by the State and under the new Rural Development Programme 2014-2020. In addition, Piraeus Bank continues to focus on updating farmers regarding practical issues. This aim is served with validity, specialisation and reliability by the special publication "Epi Gis", which presents important issues in the agricul-tural sector. In addition, recognizing its dominant role in the agricultural sector, the Bank participated in conferences, workshops, educational programme and events related to the agri-food sector.

Investment BankingPiraeus Bank provides financial consultancy services in the fields of mergers and acquisitions (M&A), as well as consultant and underwriting services throughout the Capital Market product spectrum. In 2016 Piraeus Bank continued to participate in projects of privatization, acquisitions, mergers, capital increases etc. Specifically, in 2016, in its capacity as financial advisor to the Hellenic Republic Asset Development Fund, Piraeus Bank successfully completed the most significant privatizations in the country, such as the sale of Piraeus Port Authority SA and of Astir Palace Hotel in Vouliagmeni, as well as the sale of important real estate properties abroad (New York, Washington and Ljubljana), and submitted a proposal for the exploitation of ten (10) Port Organizations. The Bank also continued to act as a financial advisor to the Hellenic Republic Asset Development Fund on some other important privatization projects, such as the sale of Thessaloniki Port Authority SA, the utilization of the grounds of the former Athens Airport (Ellinikon) and the development of real estate in Afandou region in Rhodes. In the private sector, Piraeus Bank successfully provided consulting services to clients of various sectors of the economy such as fish-farming (SELONDA AQUACULTURE SA) and real estate (TRASTOR REIC), while it also provided financial advisory services to the BoD of KLEEMANN HELLAS SA in the mandatory public offer for the acquisition of its shares by MCA Orbital Global Holding Ltd.

Stock Exchange Operations - Piraeus Securities SAIn 2016, Piraeus Securities SA once again participated in the capital market developments, maintaining its position in the spectrum of brokerage services, despite adverse economic conditions and, in particular, in trading shares on interna-tional stock exchanges, in bond trading, in research and analysis, as well as in derivatives markets. In particular, for yet another year, the Group ranked fourth in terms of trading, with a market share of 11.4%. The company’s main activities include intermediation for the trading of Greek and international shares and deriva-tives, state and corporate bonds, the provision of margin accounts, the processing of stock market transactions. Private investors may also complete their transactions in the Greek and international markets, rapidly and safely via the fully renovated electronic transaction platform. Due to the successful long-term cooperation Piraeus Securities has with foreign institutional investors, most interna-tional organizations with a presence in Greece have chosen to use it for their brokerage business. The company’s Analysis Department is considered one of the best in the Greek market and has received several awards from international organizations for the excellence of its products. Piraeus Securities was the first brokerage firm to become involved in trading derivative products. Its Market Making division closely cooperates with the Sales division to maintain a continuous presence in most derivative products, holding one of the top positions in the relevant rankings. The International Markets Division offers specialized investment services that cover the needs of investors on an international scale.

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ParticipationsIn 2016, the most significant changes in the Group's holding portfolio were:

• In the context of providing capital support to its subsidiaries, the Group participated in share capital increases of up to approximately €72 mn

• In the context of selling Group participations, Piraeus Bank: •divested33.8%ofitssubsidiary,TrastorSA. •proceededtothedivestmentofitstotalshareholding,28.6%,intheEuropeanRelianceSA. •concludedthesaleof100%ofitssubsidiaryATEInsuranceSA. •proceededtothedivestmentof25.9%ofitssubsidiary,PiraeusBankCyprusLtd. •solditsstakeinPiraeusLeasingBulgariaAD. •placeditssubsidiary,OlympicCommercialandTourismEnterprisesSA,intheHeld-for-Sale(HFS)

Portfolio.

Non Core Assets The Group has participations in a number of non-banking companies. In the context of its commitments to the Euro-pean Competition Commission (DGComp), the Group must restrict activities that are not of a purely banking nature. In 2016 the Group hired financial advisers and initiated the process of selling, amongst others, Hellenic Seaways and AVIS. The Group's other main participations are Marfin Group, Henry Dunant Hospital, Selonda, Nireus, Astakos, Merlin, Euro-terra and Picar.

Asset Management TreasuryPiraeus Financial Markets (PFM) is responsible for the effective management of the Group's liquidity in order to optimize the financing of the Group's operations. At the same time, after the operational consolidation of the divisions specializing in the money and capital markets, PFM is the central hub providing investment products and services to the Bank's customers. As a result, the bank benefits from the maximum use of synergies and economies of scale, as well as offering a holistic approach to Customers. In 2016, the effective management of the Bank's liquidity was at the heart of the Division’s activities, with emphasis placed on reducing the Bank’s reliance on the Eurosystem (ELA and ECB), which had increased significantly in 2015, mainly because of the outflow of deposits from the domestic banking system and the lack of access to the interbank market. The Bank's reduced reliance on funding from the Eurosystem resulted from the increase in deposits, the resumption of access to the Repos interbank market and the re-acceptance of Greek Government Bonds and Treasury Notes ac-ceptance as collateral by the ECB. As far as the cost of deposits is concerned, efforts to reduce it even further continued throughout the year, converging to the European averages. In addition, the annual update of the EMTN programme and the covered bond programme were successfully com-pleted, to ensure operational readiness for direct issuance of bonds on international financial markets, when circum-stances permit it. Throughout the year the Bank actively participated as a key negotiator in all auctions of quarterly and semi-annual Greek Treasury interest-bearing notes, contributing to the unimpeded financing of the country's short-term needs. Piraeus Bank participated in the ECB's QE programme, beginning in April 2016, with the sale of EFSF bonds with a nominal value of €3.7 bn, posting significant financial results. Special mention should be made of the fact that Piraeus Bank was the first systemic bank to exit from L. 3723/2008 restrictions in April 2016, when the last remaining guarantees of the Hellenic Republic under Pillar II were redeemed. PFM continued to constitute the basic point of access for the Bank’s customers to the international money and capital markets, offering a wide range of investment products and services, as well as customized solutions on Asset and Liabili-ties management and hedging for companies, with competitive pricing. In the context of actions to further enhance and support the activity on investment products and services, and in the light of particular events in the domestic and international environment, projects were carried out relating to business plan-ning, enrichment of the range of products and services offered, upgrading of the existing or creation new technological infrastructures, review of internal processes to comply with the requirements of the institutional and regulatory framework.

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For example, Piraeus Bank and The Royal Mint agreed to expand their cooperation - dating back to 2010 - into a strategic alliance for the distribution of the gold bullion Sovereign coins across Greece. This agreement ratified the Bank's leading position as it is the only commercial bank in Greece that has been offering its clients a comprehensive range of gold products and services over a period of ten years. In order to attract and maintain existing deposits, Piraeus Bank expanded the range of deposited products, indica-tively through the issue of Dynamic Returns Deposits (investment product with guaranteed capital). Furthermore, in the context of further enriching the product range, the "Life Goals" (Savings/Investment product with regular payments to Piraeus Asset Management Mutual Funds) was launched by the Network of Stores. In the high-net-worth-individual management (HNWI), the main objective was to maintain and capitalize on the ex-isting customer base by adopting solutions tailored to developments in the domestic and international markets, as well as to exploit new technological opportunities. At the same time, aiming to enhance the corporate image of Private Banking and to promote the high level of services offered and the values that govern its operation, a new corporate identity was created, with the adoption and applica-tion of a new logo. A series of promotional initiatives followed, with informative presentations, a brochure publication, advertising in magazines, etc. An indication of the reliability and quality of asset management services is the fact that the Economic Analysis and Investment Strategy Unit has been certified with ISO by the T V Hellas for its methodology for developing Bond, Share, Mutual Funds, and Investment Portfolio valuation models (with a combination of the above investment options). Based on the rating of the last comparative valuation carried out as part of the annual review, an absolute score is achieved over the other MFs evaluated. Additionally, in December 2016, five new Piraeus sub-funds were set up by Piraeus Asset Management Europe (PAME), a Luxembourg-based subsidiary of the Group, and launched by the Branch Network. In particular, PAME has enriched its Fund with three new International Funds of Funds, corresponding to all risk profiles (conservative, balanced, aggressive) and two new Liquidity (Enhanced Liquidity EUR, Enhanced Liquidity USD), now owning seven Mutual Funds. Apart from its management by the specialized executives of Piraeus Asset Management Mutual Fund, it is worth noting that the key advantage for the final customer-investor is the issue of registered shares directly in a Luxembourg institution. Regarding the provision of asset management services, Piraeus Asset Management Mutual Fund Management (AEDAK) is now active in the management of individual Sub-Funds (UCITS) -21 in Greece and seven in Luxembourg- as well as in portfolio management services for private and institutional clients, with a significant market share. Indicative of the specialized knowledge and long experience of asset managers of Piraeus Asset Management Mutual Fund is the fact that 22 out of the 28 Mutual Funds managed had a positive return in 2016, while all institutional portfolios outperformed the corresponding benchmark on 31.12.2016, reinforcing both customer confidence and company revenue. In addition, the company submitted a request to the Hellenic Capital Market Commission for the extension of its license to Alternative Investment Fund Management (AIFM), while it still continues its efforts to support and develop the market of Occupational Insurance Funds (OIF) and other Insurance Companies. In this direction, a conference was held on the "Management of Pension Funds Reserves", which brought together for the first time in Greece all the Insurance Companies in a discussion about the professional management of their reserves. The organization of such conferences will become an institution, to take place on a recurring basis. Finally, the Bank holds a leading position in the Greek market in the Clearing and Settlement Services of exchange transactions, as well as in the Custody and Administration of Securities, both to domestic and foreign institutional inves-tors. In recognition of its performance the Custody and Administration of Securities was named "Market Outperformer" and "Category Outperformer" by internationally renowned Global Custodian magazine, for its performance in the most important areas of custody services in the Greek market, following a relevant survey of Custody service providers. As part of the effort to further develop sales and enhance investment products and services, actions for standardizing custodian services were carried out, combined with the provision of access to selected investment products, through an integrated and flexible product, addressed to final customers of Greek Investment Services Firms (AEPEY). There are already 18 Greek AEPEYs customers of the Custody & Securities Services, with the potential for further development of operations and ex-pansion of partnerships. With respect to the next years, the PFM will continue to assist in the implementation of the Group's strategic objec-tives with concrete actions and initiatives, such as, but not limited to reducing dependence on the Eurosystem and push-ing up revenues from investment products and services, offering qualitative and meaningful solutions to customer needs.

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Real Estate Development and Management Picar SAThe company has undertaken the development and use of the 65,000 m2 City Link complex until 2052. The City Link com-plex covers the building block between Stadiou, Voukourestiou, Panepistimiou and Amerikis streets in the centre of Athens. City Link users are among the most trustworthy and well-known companies in the Greek and global market, thus add-ing prestige to the complex and the company. City Link is home to Piraeus Bank headquarters, which occupy an area of 13,000 m2, to the Attica Department Store, which cover an area of 25,000 m2, and to various fully renovated department stores, theatres and restaurants.

Piraeus Real Estate SAPiraeus Real Estate SA provides a full range of real estate design, development and management services. The com-pany’s main field of activity is the provision of integrated real estate services in real estate development, administration-management of project construction, integrated property management on behalf of owner-investors, advisory services on utilization-management of real estate, investment advisory services to companies and capital invested in real estate, valuations, intermediation. In 2016 the three property development projects in Arta were completed, with a total revised budget of €6.5 mn. The company provided appraisal services with a total revenue of €3 mn. The consultancy services regarding the pro-grammes analysed below amounted to total fees of €302,000. The company provides property & facility management in Greece for the City Link complex in the centre of Athens, for the Limani Business & Commercial Centre in Thessaloniki, and the Kosmopolis Park Commercial & Entertainment Centre in Komotini for Trastor REIC, with total fees of €894,000. The company also provides administrative and financial services to 16 of the Group’s domestic real estate companies with a total property value of approximately €600 mn. The total fees for the company from the provision of administra-tive and financial services amounted to €345,000 in 2016. Since 2014 Piraeus Real Estate, in cooperation with Piraeus Bank, has been implementing contracts with the Euro-pean Investment Bank for the management of the JESSICA Urban Development Funds for the Central Macedonia and Thessaly Regions (fund management with approximately €40 mn from the EU Structural Funds and €16.8 mn from Piraeus Bank). The commission for 2016 amounted to €110,000 and Piraeus Real Estate's total commission over the programme’s lifespan is estimated at approximately €1.6 mn. Piraeus Real Estate, in partnership with Piraeus Bank and other companies, continued to honour its contracts for the provision of financial consultancy services to the Greek State/Hellenic Republic Asset Development Fund SA (HRADF) with regard to matters of recording, public property utilization and privatizations. In summary, Piraeus Real Estate, through agreements with the Group’s Real Estate companies in Greece and abroad, manages real estate property of a total value of approximately €670 mn. The total gross revenue for the Group from the operation of Real Estate companies amounts to approximately €30 mn per annum.

ETVA Industrial Parks SAETVA Industrial Parks SA was founded in 2003 following the carve-out of the Industrial Parks sector from ETVAbank, during its acquisition from Piraeus Bank Group. Piraeus Bank Group has a 65% participation and the Greek State holds a 35% stake. The company’s main scope of activity is the design, development and use and management of Industrial Areas (In-dustrial Areas/VIPE - Industrial and Entrepreneurial Areas/VEPE - Small Business Park/VIOPA) and Business Parks (EP). ETVA Industrial Parks SA is the basic agent of industrial and professional Real Estate in Greece. The company’s mission statement today is the effective management and use of industrial areas, the creation of modern and sustainable industrial parks and the provision of high quality conventional and innovative services, with the goals of:

• thecreationofaviableandprofitableorganizationforPiraeusBankGroup and the Greek State with modern environmental standards,

• the support of already established companies and the facilitation of business synergies and networking between them,

• thecreationofopportunitiesandtheattractionofnew business activities in the existing

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and new Industrial Areas, for the country’s local and regional development,• thedeterminantroleinmattersofthecountry’sindustrialandbusinessgrowth,andmore

specificallyinissuesregardingthedevelopmentofindustrialparksandrelatedbusinessinitiatives, as well as in issues of applied technologies on environmental and agricultural innovation, at a national and international level, as well as

• the"export"ofgainedexperienceandknow-how,throughtheprovisionofhighqualityservices, to other companies, institutions and organisations in Greece and Southeast Mediterranean.

Today, ETVA Industrial Parks operates 26 industrial areas and industrial parks with modern and transparent pro-cesses, improving processes and rationalising operating costs. Approximately 1,500 businesses operate in the company’s areas of responsibility, with over 30,000 employees. The turnover of these businesses reaches €9 bn, corresponding to approximately 5% of the country’s GDP. ETVA Industrial Parks, in collaboration with Piraeus Bank, also promotes investments aiming at the development of new innovative initiatives in the context of green economy and driven by social reciprocity. The company’s development and investment plan is moving on the strategic axes of the Logistics industry as well as in supporting Businesses located in the Industrial Areas by designing and offering services to facilitate their operation. A key role will be played by the Hellenic Fund for Sustainable Development (ETVA FUND), a subsidiary of ETVA Industrial Parks founded in March 2015. ETVA FUND was set up to participate in sustainable high-value-added investments, which at the same time have the characteristics that will ensure high and measurable social and environmental indicators in the future. In August 2016, ETVA Industrial Parks, in cooperation with GOLDAIR Cargo, submitted a bid to build and run a new rail freight terminal (Commercial Park) in Thriasio. The JV was awarded the project as a Temporary Contractor at the end of 2016. According to the schedule of preliminary project actions, the start date of the Concession is estimated to be in the first quarter of 2018. The development of the Park will be carried out in two phases with a total budget of €120 mn. The participation of ETVA Industrial Parks will amount to 80%. Using the existing experience and know-how of ETVA Industrial Parks and its employees, the optimal use of the exist-ing industrial land, as well as the cooperation with the specialized financial experience of Piraeus Bank Group, in particu-lar the Environmental Banking Unit, as well as the institutional responsibility of the Greek State, the company is expected to prescribe a positive development path.

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International Operations

Piraeus Group's international network consists of five Banks in Southeast Europe, a branch in London, one in Frankfurt and a representative office in Moscow. The five banks have their headquarters in Albania, Bulgaria, Romania, Serbia and Ukraine, with a total of 261 branches, total assets of €5.4 bn, total net loans of €2.7 bn and total deposits of €3.0 bn. The negative sentiment towards the Greek Banks in 2015 due to the imposition of capital controls and the macroeconomic and political instability in Greece was reversed in the first few months of 2016. A significant contribution was made towards this effect by the successful share capital increase of Piraeus Bank at the end of the previous year. Thus, confidence in the domestic banking system was restored significantly and there was an inflow of €200 mn in deposits to the overseas banks of Piraeus Group, at a lower cost due to the continuous decline in interest rates. The increase in deposits, coupled with the restrained credit expansion, created excess liquidity of over €400 mn, which is returned to the parent to cover domestic needs at significantly more favourable financing costs for the Group. Even though most countries in which Piraeus Bank is present had a positive rate of growth in 2016 and a general improvement in their economic indicators, this did not necessarily go hand in hand with their credit expansion. The main reasons for this are the stricter supervision by the central banks of each country, the high borrowing rate of mainly large companies, and the general unfavourable economic sentiment that hinders retail banking. In 2016 Romania experienced GDP growth of 5%, with low interest rates, low public debt and increased domestic consumption, with tax cuts and wage rises. Credit expansion, however, remained at 1%. Bulgaria maintained its public debt at below 30% of GDP, enjoyed a growth rate of 3% and unemployment of 8%. It continued to manage its budgets with care, thus achieving a zero budget deficit. The credit expansion rate in 2016 stood at 3%. Serbia’s real GDP grew by 2.5%, with particularly low inflation rates (0.3%) and unemployment declining. The relatively low credit expansion in these countries, in conjunction with the general economic sentiment in Europe and the tendency of European banks to curve their activities locally, leads those banks that invested in the region to re- examine their model and to select the countries in which they will continue to have a presence. Greek Banks are even more restricted due to the obligations they have undertaken in the context of the implementation of the Restructuring Plan, as approved by the European Commission for Competition. In this context, in 2016 the Group’s subsidiary Piraeus Bank Cyprus Ltd was recapitalized by Holding M. Sehnaoui SAL and a number of other investors, with €40 mn. The transaction was completed in December 2016, after receiving all regulatory approvals from the supervisory authorities and the HFSF. Following the acquisition of shares by the investors, Piraeus Bank's stake in its subsidiary stood at 17.7%. As a result of the transaction, Piraeus Group's Common Equity Tier 1 capital (CET 1) ratio improved by about 15 basis points. In addition to Piraeus Bank Cyprus, in 2016 the Group completed the sale of Bulgaria Leasing to a local buyer. In addition, in June 2016 the Group sold a Romanian portfolio of written-off loans to the amount of €165 mn at very lucrative terms. In 2016 the Bulgarian National Bank (central bank) carried out an Asset Quality Review (AQR) of all banks operating in

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Bulgaria for the first time, using ECB methodology. 75% of the banks’ portfolio was examined. The result was particularly positive for Piraeus Bank Bulgaria, as only a minor adjustment was made to its impairments, thus confirming that the Bank is very well capitalized. The Bank's capital adequacy ratio stands at a very high level (22.7% compared to the 8% threshold), as does the CET 1 ratio at 21.2% (compared to the 6% threshold). In summary, in 2016 the key actions in international operations focused on:

• ReducingNPLsthroughtheactivemanagementofcustomerrelationshipsandshiftingtohigherqualitycustomers,aswellasstrengtheningthecoverageratio.AdequatelystaffedRBUs,specializedinNPLmanagement,havebeensetupintheGroup’sforeignsubsidiaries since 2014 providing customized solutions per loan and customer.

• MaintainingtheGroup’sforeignsubsidiaries’highlevelsofcapitaladequacy.• Retrieving deposits at lower costs. • Rationalizing costs even further.• Maintainingtheliquidityratiosandreturningexcessliquiditytotheparent.Asalready

mentioned, over €400 mn were repaid to the parent company, thus replacing the Group's fundingrequirementsfromELAwithlowercostliquidity.Inaddition,in2016PiraeusBank Romania repaid liabilities of €210 mn, which had previously been provided to the subsidiaryforliquiditypurposes.

As a result of the above the Group posted pre-provision operating profit €48 mn for its international operations. In 2016, Total Assets of subsidiaries abroad amounted to €5.4 bn.

Romania 101 120 -19

Bulgaria 75 75 0

Serbia 26 26 0

Albania 39 39 0

Ukraine 18 18 0

London 1 1 0

Frankfurt 1 1 0

Total 261 280 -19

Branch Network 2016 2015 Change

* 2015 data excludes discontinued operations.

The Group’s continuing international operations constituted 7% of the Total Assets, 28% of the branch network and 20% of its human resources.

* 2015 data excludes discontinued operations.

Gross Loans 3,650 4,149

Deposits 3,043 2,810

Employees 3,583 3,680

Basic Figures (in € mn)* 2016 2015

Bank RelationsOperating in a negatively changing international environment, where interbank relations are sacrificed for the need to reduce risks, the possibilities for broadening bank co-operation are extremely limited. Due to increased regulatory controls and supervisory constraints, Banks avoid risk-taking, while large financial institutions, which traditionally acted as correspondents, are redefining their strategy and goals, clearly aiming at reducing the number of co-operating banks.

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The conditions are even more unfavourable for Greek banks, due to the economic crisis experienced by Greece and the ensuing breach in international confidence, as well as the implementation of capital controls for a second consecutive year, which complicate carrying out even the simplest international transactions, with a significant impact on foreign credit institutions. In this extremely difficult and especially fluid environment, Bank Relations Division managed this year, not only to maintain its existing partnerships, but also to offer new products and services to cover customer needs. In addition, the Division has strongly supported the units, branches and Group subsidiaries in executing their operations in the best possible way, as well as the other financial institutions in their co-operation with Piraeus Bank. The Division’s role was also remarkable in supporting commercial transactions with banks, as well as the implementation of the EIB and EBRD trade facilitation programmes. Finally, special emphasis was placed on communicating and informing the correspondents of the Bank's strategic steps that will lead to its growth as well as the developments in the Greek banking system.

Piraeus Bank Beograd ADPiraeus Bank operates in the Serbian market since 2005, when it acquired Atlas Banka, which was later renamed to Piraeus Bank Beograd. At the end of 2016, it had 26 branches. In 2016 the Bank continued its effort to improve the quality of its loan portfolio, undertaking a more active management of NPEs and turning towards high yield customers, especially in retail banking. The following table presents information regarding the Group’s operations in Serbia for 2015-2016.

Assets 427 444

Gross Loans 365 361

Deposits 265 249

Branches 26 26

Employees 451 452

Operations in Serbia (in € mn) 2016 2015

Piraeus Bank BulgariaIn 1993 Piraeus Bank set up Piraeus Bank Bulgaria, the first foreign bank in Bulgaria. At the end of 2016, its network numbered 75 branches across the country, with a market share of 3.4% in terms of loans and 3.3% of the country's total banking assets. In 2016 Piraeus Bank Bulgaria increased its deposits by 6%, reduced the level of NPLs and further strengthened its coverage ratio.

Assets 1,499 1,502

Gross Loans 914 1,080

Deposits 1,106 1,040

Branches 75 75

Employees 871 885

Operations in Bulgaria (in € mn) 2016 2015

Piraeus Bank RomaniaPiraeus Bank Romania was established in 2000 to cover the needs of Greek enterprises operating in Romania, but soon extended its operations, providing a full range of banking services to local businesses and households. As a result, its bank network grew, numbering, at the end of 2016, 101 branches in all major cities in the country. During 2016, Piraeus Bank Romania:

• Restructured its branch network by closing 19 branches.• Reduced its assets but increased its deposits.• MaintaineditsNPLratiolow.

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The Deposits of Piraeus Bank’s Romanian subsidiary were significantly affected by the situation of the Greek economy and dropped significantly until September. This course was reversed in the last quarter of the year.

Assets 1,472 1,581

Gross Loans 797 835

Deposits 963 853

Branches 101 120

Employees 1,337 1,435

Operations in Romania (in € mn) 2016 2015

Tirana BankTirana Bank started its operations in Albania in September 1996 and it was the first private bank to operate in the country. Its network at present consists of 39 branches across the country and is placed among the top banks in Albania. During 2016 Tirana Bank preserved its assets and deposits at the same levels, maintaining particularly high levels of liquidity, which in part is returned to the parent. Profitability before taxes and provisions remained at the same level.

Assets 611 602

Gross Loans 228 271

Deposits 466 460

Branches 39 39

Employees 436 429

Operations in Albania (in € mn) 2016 2015

JSC Piraeus Bank ICBPiraeus Bank has been present in Ukraine since 2007, when it acquired the local International Commerce Bank. At the end of 2016, the network of JSC Piraeus Bank ICB included 18 branches across the country. Piraeus Bank's figures in Ukraine are declining, as fiscal and political instability in the country impose the need to reduce size and shift from traditional retail banking to alternative service channels, offering high quality services to customers. In this context, Piraeus Bank ICB has managed to be profitable after taxes.

Assets 140 154

Gross Loans 70 115

Deposits 60 52

Branches 18 18

Employees 448 438

Operations in Ukraine (in € mn) 2016 2015

Piraeus Bank - LondonPiraeus Bank’s branch in London was set up in 1999 and is supervised by the local authorities. The branch specializes in:

• Personal banking and the provision of specialized deposit products.• The provision of mortgage loans to Greek and British nationals residing in Great Britain

andwhoaremainlyinterestedinacquiringrealestateinGreece,GreatBritainandothercountries where Piraeus Bank Group is present.

• Supporting the operations of Piraeus Bank of Athens and its subsidiaries.

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Assets 930 1,115

Gross Loans 1,235 1,471

Deposits 40 26

Branches 1 1

Employees 18 22

Piraeus Bank Branch in London (in € mn) 2016 2015

Piraeus Bank - FrankfurtThe Frankfurt branch was integrated in Piraeus Bank Group after the first half of 2012, with the acquisition of the "healthy" part of former ATEBank. The Frankfurt branch is the only presence of a Greek bank in Germany. The Branch offers deposit products, web banking, letters of guarantee, domestic and foreign payments and remittances, while focusing on attracting of deposits from Greek customers. At the end of 2016 assets amounted to €174 mn, while it employed 13 people.

Assets 174 152

Gross Loans 14 16

Deposits 144 13

Branches 1 1

Employees 13 14

Piraeus Bank Branch in Frankfurt (in € mn) 2016 2015

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Technology, Organization and Central Operations

Group ITIn the context of harmonizing its priorities with the Bank’s business plan for 2016, the Group IT focused on projects and initiatives that supported the following:

• Compliance with institutional and supervisory obligations. • SupportoftheoperationsregardingthemanagementofrestructuringsandNPLportfolio.• ImprovingtheBank'squalityofservicethroughfurtherautomationofoperationsand

processes.• UpgradingthequalityofservicetotheBank'scustomers,usingstate-of-the-art

technologies.• Maintaining technological excellence as a key competitive advantage.

Based on the above, a significant number of critical projects was completed, while as shown in the following histogram, the IT investment expenditure rose for a fourth consecutive year. Additionally, the ratio between capital and operational spending of Piraeus Bank IT, is the same as the average of 320 financial institutions that the Gartner advisory firm presents in a global survey.

27% 27% 23% 20% 26% 25% 29% 31%

G 65%

73%G 73%

G 70% 69%G 69%

G 68% G 68%G 67% G 67%

73%

77%

80%

74%75%

71%

2009 2010 2011 2012 2013 2014 2015 2016

Operational vs Capital ΙΤ Spending

Piraeus Capital ExpensesPiraeus Operational ExpensesG: Gartner Operational Expenses

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Development & Improvement of IT Systems Innovation Initiatives Emphasizing the rapid and qualitative customer service, the innovative "e-Signature" service, the first in the Greek banking sector, was implemented. The new service allows customers and Bank employees to sign forms and contracts electronically. The main goals of the service are the transition to the "Paperless Branch" and the best digital customer service experience at Branches. Piraeus Bank, renowned for the importance it places to Cultural and the Environmental issues, is the first bank in Greece to eliminate the need for pen and paper, in signing applications and contract documents. By focusing on high-quality service, the Bank stands out in the customer’s consciousness, creating the corresponding value. The processes required to complete transactions are:

• simplified,sinceitisnotnecessarytoenterthesignatureoneachpageofthedocumentbut only once on the last page on a special tablet,

• time-saving, because the application is completed faster and the time spent in the branch islimited.Additionally,therequestisprocessedimmediately,

• more secure. The signature can only be used in the document signed, it cannot be copied or used in any other document. The digital signature-sealed documents are archived in a tamper-proof and secure digital vault. To ensure maximum customer security Piraeus BankhasbeencertifiedbyIntesaSpa-IBMCompanyfortheencryptionofdataforthesolepurpose of electronically signing of documents,

• organize the customer. He/she can have an electronic record of all contracts, applications and transactions – made at the cashier – sent to his/her personal email, and

• contribute to protecting the environment since paper is no longer used.

In 2016, a new modern and innovative Paperless Cashier was launched in six Branches, promoting the elimination of paper from the branch. In order to create the so-called paperless cashier, a combination of new technologies and peripheral devices was needed:

• contactlesscardreaderforautomaticcustomeridentification,• e-Signature tablet for taking digital signature,• scanner for the direct digitization of non-electronically signed documents and their

storage in a special system,• laserprinterforphysicalprintingofdocuments–ifrequired–aswellasforprintingofcheques.

The new e-Branch of Piraeus Bank offers a new banking experience through smart services and technological innovations. The customer can discover a new way of servicing and complete his/her transactions in a friendly and comfortable environment, on a daily basis with extended opening hours and on Saturdays. Especially in the e-Branch are provided:

• Remotecashier(VirtualTeller,VTS).VTSallowstheBanktoofferitscustomerstheworld'sonly remote access to cashier services. The customer consults the cashier through a video call regarding the transactions he wants and by using a special device activated by the cashier may perform 90% of the cashier’s transactions. Transactions are made in euro using their e-signature.

• Automatic Transactions. Automatic and prompt bank transactions can be made through the easypay automatic transaction kiosks, the automatic passbook update machine and the Piraeus Bank prepaid gift card issue machine.

Transactions at easypay kiosks are simple and fast, and can be executed either by entering cash in the machine or by using a credit/debit/prepaid card. One does not have to be a Piraeus Bank customer to use the machine.

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The automatic passbook update machine gives customers the opportunity to update quickly and simply their passbooks on their own. It is also possible to issue a prepaid card by making a cash deposit, charged with the amount set on the spot (minimum €10 and maximum €255). The card is already activated and can be used directly for shopping or even as a gift.

• Digital corner: In this area the customer has the opportunity –through the available computerandtablets–tonavigateandfindouthoweasy,fastandsecureonecancarryout daily transactions through the awarded Piraeus e-banking services.

• Exhibition area: In this specially designed area, products and services of selected Piraeus Bank partners are presented.

• Facilitators:Atthee-branch,thereisalwaysacustomerserviceofficer,readytoguideandinstruct customers on how to carry out their transactions.

• Contactcentre:Onthissite,customerscancontactaPiraeusBankofficerthrough a phone call.

• Meeting room: Customers no longer need to visit a Piraeus Bank branch to meet their banking associate. They can schedule an appointment with him at the e-branch meeting room.

Payment and Deposit SystemsResponding to the new requirements arising from the continuing capital controls regime, the necessary upgrades were made to the Bank’s infrastructure to directly support the requirements of the Legislative Act of 22.7.2016, which set new cash withdrawal limits due to incoming remittances, diversification of ATM withdrawals, creation of new cash withdrawal limits from deposits. The management of special limits such as those of Diplomats, School Committees, Vostro accounts of Greek banks were automated. Finally, additional functionality was given to Bank users with regard to the management of the limits in order to directly serve customers in cases requiring transfer or consolidation of limits. During the year, the process of delivering the Common Agricultural Support and the Aid for agricultural practices beneficial to the climate and the environment through OPEKEPE was implemented with absolute success. Through this process, which took place in two phases in October and December 2016, more than 1.8 mn credits were made to the beneficiaries’ accounts for a total amount of €1.7 bn, as well as the automated management of their contributions/dues to ELGA (Greek Agricultural Insurance Organization), OGA (Agricultural Insurance Organization), GAIA, Epixeirein, Loans and Agro-carta. A few months earlier, at the end of April, the Single Aid and "Green" cultivation for the second tranche of 2015 (1.25 mn credits totalling €700 mn) were completed. New functionalities such as debiting the Social Security Supplement card by wire transfer and prepaid card, urgent remittances via winbank, the possibility of issuing and debiting a labour insurance coupon on a winbank account or at the Bank's cashiers, have satisfied the Bank's customers standing demands, increasing the quality and speed of service. The transition and use of DIAS infrastructure for the exchange of records and bilateral fixed payment orders since the beginning of the year solidified the Bank's compliance with SEPA/EPC Regulation (EU) No. 260/2012 requirements. The Bank's payment systems have been upgraded, so that once connected to winbank's infrastructure, the Bank's integration into the MyBank project will be enabled. MyBank is a pan-European online payment solution that enables consumers to buy from a store inside or outside the country by directly debiting their bank account with ease of security and reliability. The Bank participates in MyBank as a Buyer and as a Seller, thus integrating both its customers and its merchants into this circuit. An important product that has been incorporated into a productive environment is that of Contract Banking Agribusiness. The basic philosophy of the programme is to install, through short-term financing, Piraeus Bank installed POS terminals in farm supplies stores, in order to purchase supplies from wholesalers with in cash, achieving the maximum possible discount. The ultimate goal is to pass on these rebates to producers who will buy whatever they need for their crops from the farm supplies stores, using Contract Farming Card, thus reducing production costs. In the context of linking the Bank’s the information system on Early Retirement of Farmers (ERF) with the information system of OPEKEPE, the transfer of data of beneficiaries of the ERF system to the Integrated information system concerning rural development & fisheries (OPSAA) was system successfully completed. All monthly payments made in 2016 were transferred from the ERF system to the OPSAA system.

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Cheques and Commission SystemsThe Safe Deposit Boxes Administration & Management has been enhanced through the automation of filling in and printing of the contractual documents, of entering the details of the procedural representatives and finally of discontinuing the lease. A new automated process of managing cash inflows to accounts linked to confiscations was set up, with real-time processing of credits to deposit accounts, the beneficiaries of which are distressed debtors, starting with the distress warrant with the oldest date of service and calculating the corresponding amount for the commitment and payment of due amounts, taking into account the type of distress warrant, the amount of the residual claim, the amount protected as unseizable, the amount protected because of its flagging as salary, the number of account beneficiaries, and all other rules governing this process from a legal point of view. The daily branch reports have been enriched to provide targeted information and a significant reduction in the volume of documents to be audited. The functionality of the infrastructure for Pricing and Customer Pricing Policy Management has been expanded considerably through their interconnection with important Bank systems, such as the new Import-Export System (TI), Cheques, Bills of Exchange, Loan Origination System (LOS), Velti system for lending approval, winbank, Selected Cashier transactions, so that commissions can be automatically calculated, as well as any special customer pricing. Utilizing the new functionality of the infrastructure, two new (default) commission tariffs for Large Business and Shipping have been developed and are already in use. The selection of these invoices is based on customer segment, while there is a differentiated approval flow for special pricing according to the invoice.

Investment SystemsRegarding Security Custody services, a functionality has been introduced for information on Market Abuse. A corporate action was developed for deleting shares of delisted companies from the customer's warehouse. The functionality creates an archive of committed and free shares, deletes them from the warehouse and subsequently informs the customer through the monthly statement issued to him. Improvements were also made to the method of estimating investor segmentation and the possibility of creating a SATAPI legal entity accounts for shipping companies not registered on the General Electronic Commercial Registry. Regarding the Mutual Fund management systems, the "Life Goals" product has been reintroduced, a new cut-off process has been implemented that will run on time and will process the respective houses that have a cut-off at that time, while the structures to support the change in overdraft rights from 10% to 30%, resulting from the purchase of Third Party Mutual Funds.

Contract Farming SystemsFor Agro-carta, parameters were customized and a new contract was created, the system was updated with 190,000 producers with pre-approved limits and all the necessary improvements and modifications were implemented so that the application could manage this new populous contract. The processes were automated for setting limits and approval checks for new contract participants, for creating the interface with the management application of financing claims, and for estimating the turnover for new participants, based on criteria registered at the contract level.

Bancassurance Products SystemsThe functionalities for supporting the "Gold Health Solutions product discount campaign" as well as the payments of "Gold Health Solutions MedNET" were integrated in a productive environment, and the IT support for selling the "Credit Cards Benefit & Debit Cards Benefit" product was developed. A functionality was created to support DEIA (Department of Private Insurance Supervision) insurance premium, TEAAPEA (Insurance Fund for Insurance Agents and Insurance Companies) calculation, customer statistics, and Addition/Updates campaigns.

Time deposit systems"Loyalty" time deposits were upgraded to support the monitoring of accounts of the time deposits circuit, to and from Siebel CRM Integration Pack, as well as to export reports and various printing programmes. As part of the programme to re-attract capital, the required infrastructure to support the new time deposit products Apofas-easy, ANTI-STROFIIII, and CASHBACKEURO was put in place.

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ATM/Card/Switching Support SystemsThe migration of the credit cards of former Geniki Bank and former Panellinia Bank was completed successfully; all Piraeus Bank credit cards are now managed by a single Service Provider with significant economic benefits for the Bank. The Safe Chargeback (SCB) installation and operation project was implemented. Safe Chargeback is a tool for integrated and overall management of disputes and debits/credits, aiming at minimizing operating time and reducing operating expenses (man-hours), while maintaining high quality of Issuing and Acquiring services. It interconnects all the business structures involved (Branch Network, Call Centre, winbank, ATM support, Customer Support, etc.), both in order to resolve disputes promptly and correctly and to provide faster customer service. The implementation of an application for collecting and processing data on the Social Solidarity Allowance (KEA) beneficiaries was completed, with the purpose of mass issuance and charging of prepaid cards through the Bank provider (Euronet). Among other things, the user may automatically and manually identify customers, create a history file, etc. In terms of customer service from the ATM/POS TERMINAL network, the new Authentic switching system by NCR was upgraded with enhancements, new functionalities and transactions, to support the Bank's business planning on customer service in these channels. Of these, the following are indicative:

• The implementation of touch screen ATMs in the Bank's network, where the customer makes his choices during the transaction on the ATM screen rather than with keys.

• Cash recycle ATMs (ATM with online depositing and withdrawal of banknotes from deposits) were set up in the e-branches.

• AspartoftheBankWideLoyaltyproject,newyellow-relatedtransactionswereofferedtothecustomer (using yellows for purchases with a debit card at POS, displaying yellows on ATMs).

• UpgradeofPOSterminalsinstalledinPPC/EYDAPandTaxOffices,toenablepaymenttransactionsofpublicutilitybillsPPC(PublicPowerCorporation)/EYDAP(watercompany)and taxes, respectively.

e-Banking SystemsA major project for 2016 was the redesign of winbank for Retail and winbank for Business. With a responsive design architecture and a fresh and quite different format, the new winbank application suite is a modern and user-friendly system. With significant improvements in the search engine, information depiction and use, it provides a dynamic, easy, fast and complete environment that reflects Piraeus Bank’s philosophy and spirit. The service has been enriched with new features, incorporating new products and offering new solutions to daily customer needs. In this context, it is worth mentioning:

• IRISOnlinePayments:Offerstheabilityofimmediatemoneytransferandcredit ofbeneficiary’saccountheldinotherfinancialinstitutionsinGreece.Obligationstothirdparties are covered immediately at a low cost, eliminating time-wasting and with noburdenonthebeneficiary.

• RemittanceManagement:Monitoringanddetailedinformationonincomingandoutgoingremittanceswithpossibilityofrequestingmodification,cancellationorreturn.

• LoanUpdate:Analyticalinformationoncreditdataandloanbalancesandinformation on movements and repayment plan.

• CardUpdate:Followingthepeakinplasticmoneyuseduetocapitalcontrols,informationon the balances, movements and approvals of all types of cards (debit/deposit/prepaid) andtheopportunitytomanagethelimitsonline,helpedcustomerstoeffectivelycontroltheir transactions.

• Contract Banking Agribusiness: Customers participating in the "Contract Banking Agribusiness"programme,aregiventheopportunitytomanageandusetheirfinancingplan according to their needs and their available balance. Thus, they can allocate and

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redistribute their overall approved limit to their various partner enterprises, planning their needs and meeting their obligations.

• My Bank: My Bank enables the buyers of an online store to complete their transaction by directly debiting a bank account, using the web banking of their cooperating bank. From the online shop the customer is redirected to the Bank’s website, enters his e-banking and completes the payment in a fast and easy way.

• The new winbank was expanded to the Phone Banking platform, while remote registrationwasalsosetuptoenablecustomerstosignupfortheserviceeasily,quicklyand safely without having to visit a branch.

• Additionally, 145 new payments were added to the system to agencies and organization, 200 newpaymentorders,aswellasthepossibilityofmonitoringlettersofguarantee,foreign trade and customer bill of exchange management.

• The new winbank for Retail and winbank for Business services, received a number of awardsin2016,themostimportantbeingLighthouseE-volutionAwards(Webpageredesign,InnovativeBankingServices,Usability&UXOptimization,MobileBanking,Design-Aesthetics)andGlobalFinanceAwards(BestConsumerDigitalBankinWesternEurope).

Continuing its effort for new easy-to-use and innovative services, Piraeus Bank has enriched the winbank mobile banking app with the one touch service, a new functionality for easy and quick access using the fingerprint service, thus also increasing the level of security of the service. One touch functionality is available on devices with Touch ID/Fingerprint Scanner for iOS and Android operating systems, while for other devices, quick login is available with a 4-digit PIN. It is worth mentioning that the quick login functionality significantly increased the use of the service, since the users who activated it have increased their mobile banking activity by almost 50%. Piraeus Bank was awarded the Silver Award at the Cyta Mobile Excellence Awards 2016 in the "Mobile Application Design Innovation" category and Bronze Award at the Bite Awards 2016 in the "Mobility & Mobile Applications" category. Focusing on being in the forefront of innovation and keeping in touch with the ongoing trends in bank card usage worldwide, in 2016 Piraeus Bank became the first bank to offer in Greece the new service of making contactless payments taking advantage of the HCE (Host Card Emulation) tokenisation technology. With this technology, which operates independently of the mobile operator (since the SIM card is not used), Piraeus Bank is the only one that has the ability to reach out to its entire customer base by introducing a new payment method. With the use of Tokenization technology, the actual data on the card is encrypted without being stored in the application or any part of the telephone, providing absolute security. The new service is essentially a digital wallet, which is installed on the cardholder's mobile. Thus, when making a purchase at any store, instead of using the plastic card, cardholders can place their mobile phone in front of the contactless POS terminal and complete payment immediately with no additional charge. Piraeus Bank received a Gold Award for the winbank wallet app at the Cyta Mobile Excellence Awards 2016, in the "Mobile Wallet" category. In 2016 Piraeus Bank launched the New Yellow Reward Scheme. The yellow programme rewards its members for their overall banking relationship for the products and services they already own or will acquire. "Yellows" can be redeemed directly at the POS terminal and ePOS of large companies participating in the Programme, as well as on the site www.yellowday.gr. Lastly, aiming to provide broad information about the yellow scheme, the Bank created the new website yellow.piraeusbank.gr. The new "MasterPass Wallet" service was introduced in the Paycenter's e-Payment Platform. The digital wallet is a new way of paying for card transactions (credit, debit, prepaid). Through the ePOS Paycenter platform, e-shop customers are offered the option to pay with MasterPass digital wallets, which, in turn, are provided by banks in Greece and abroad. Through the ePOS Paycenter platform, the new MyBank service was also implemented. MyBank is a pan-European online payment solution that enables consumers of online stores to complete their purchases by direct debiting their bank account using the bank's web banking. The service works for all web banking users of Piraeus Bank, Alpha Bank, National Bank and Eurobank, covering almost all Greek web banking users.

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Credit SystemsDuring 2016:

• FastTrack of Applications Review process has been automated with an Automated Customer Account Transfer (ACAT) mechanism.

• Post-datedChequeswereaddedontothesystemandthetwosystemscommunicatedupuntil the completion of the solvency check for faster completion of the process.

• The legal and technical review of real estate through the LOS was implemented and communication was made with the corresponding external systems of Lawyers and Engineers.

• New functionality has been added on the Proxima+ platform of Piraeus Factoring to support the complete factoring of invoices through the Bank.

• A mechanism has been incorporated to automatically charge expenses-commissions, such as the cost of modifying contract terms, overriding Positions, or renewing a Partnership Proposal.

• The Loan Origination System (LOS) has been interfaced with the Trade Innovation system formanagingLettersofGuaranteeandDocumentaryCredits.

• A new ESMS scorecard has been developed that breaks customers into risk categories based on the industry and total client credit.

• Thecustomerspecification(Platinum,Gold)incorporatedinLOS,takenintoaccount in the prioritization of credit claims.

• In the context of digitizing Credit Files and Dispute documents, it was possible to import documents into the LOS with additional information regarding the actual date ofthedocument.Additionally,adocumentfilterhasbeenadded,basedonthisdate.

• New functionality has been developed in the CSS for intangible shares that have been pledged and are held in another bank, as well as a specialized infrastructure for recording theliquidationofcovers.

• Thecollectionofmortgageloancostswasautomated,throughaspecializedworkflowapplication.

• Improvementsintheflowofsettlements(FinancialDifficulty,ArrearsResolutionProcess-ARP,Relevanceofrequestsbythesamecustomer,conversionfromCHF,CHFLoanTermination, Dispute, Consolidation of Arrears Management, Inclusion of Defaulted Loans Management).

• Implementation of Retail Dashboards and development of specialized Operational Reports.

• Computerizedsupportandimprovementoftheprocessesconcerningrequestsforchangesinloansforindividuals,fromthetimeoffilingarequesttoitsimplementation.

• Implementationofthemerchantapplicationmanagementprojectwascompleted.Processes for the submission of a new application as well as the approval of a consumer credit or credit card through dealers were implemented in order to accelerate the approval process until the disbursement or issuance of a credit card, in order to improve the Bank’s position versus competition in the Instant Credit market.

• ImplementationoftheprojectofinterfacingtheprocessofregistrationofMortgage&ConsumerLoanrequestswithcollateralthroughtheVeltisystemwiththeflowoflegalinspectionthroughtheAPPIANsystem.

• ImplementationofprojectfortheautomaticcalculationoftheMonthlyDisposalIncome

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(MDI),asdefinedbythenew Credit Policy for Individuals. This implementation supports automatedcalculationswithoutauthorization,theabilitytoapplydefinedandcontrolledmodificationstothevariablesusedinthecalculation,whereapprovalbytheauthorizingofficerandtheproductionofstatisticalreportsisenvisaged.

Business Process Management SystemsDuring 2016:

• The distress warrant application was enhanced with automations that aim to reduce the users’ workload, with new features (revocation of distress warrant) and with the installation of a system for future credits, aiming at the immediate activation of the Bank's obligations vis- -vis the related entities (General Secretariat for Information Systems - GSIS, Social InsuranceInstitute-IKA),etc.

• The existing process of managing applications for legitimation of inheritance rights has been enhanced, in terms of both technology (on a new Sail/Tempo platform) and functionality, with the consolidated management of applications from urban centres and countryside. The portfolio research is carried out system wide.

• TheMerchantAcquiringapplicationhasbeenenhancedwithnew features such as Amendment Datasheets, Central Contract Archive, Auto-Open Customer Arrangement. Also in the context of both centralized monitoring and data visualization, a Business Activity Monitoring tool was created.

• A new legal inspection management process has been implemented, to automate the flowsassociatedwithlegalinspectionofrealestatepropertiesusedascollateral.Legalinspections are automatically activated by the Bank's loan systems and are automatically assigned to lawyers-employees of the Bank or external partners, depending on the locationoftheproperties.Uponcompletionofthework,thecorrespondingloan,realestateanddocumentmanagementsystemsareautomaticallyupdated.Theprojectalsoinvolved the implementation of lawyer data management application, which will also be used by other Bank applications.

• A newcustomerchequebookissuanceprocedure(replacingexistingprocedureintheBank's central system) has been implemented in order to automate its updating with regard tothecustomer-centricsystemandenrichthecontrolsrequiredintheapprovalprocess.

• A newcentralizedEventNotificationManagementprocesshasbeenimplemented,managingCashier&TransferDeficit/Surplus,Theft,andPINtheft.Thenew central process updates the Bank’s Open Pages risk system about the event system wide and automatically.

• A new processforgrantingCustomerorHeirDebtCertificationwasimplemented,initiatedbytheBranches,wherethecustomerand/orthedeceasedisidentified,therequireddocumentsareattachedandthecentralissuingsystemisupdated.Thetargetachievedwasthequickandautomaticalcollectionofapplicationintothecentralsystem.

Business Intelligence and Customer Relationship Management (CRM) SystemsOver the past year, the Bank's Contact & Sales Management (RMA) platform was redesigned and upgraded. After the upgrade the application can manage a large and significant part of the Bank’s customer base and is an important tool used by the Affluent and Small Business Segments as well as the Restructuring Officers. The new Bank Wide Yellow Loyalty programme was completed and made available to the Bank's customers, who may earn points through a wide range of bank product-related actions, and redeem them at selected partners, using

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innovative products and services. The project included the interconnection of a number of Bank systems such as: Siebel, Talos/Yellowday, ICE, winbank, ATM, winbank Mobile as well as interconnection of all systems and channels with specific merchant POS terminals for all MSPs in the market. The implementation offers advanced personalization per customer. New implementation in the I.C.E. Core Operational CRM System for "Thank you" campaign: The necessary functionality in the I.C.E. customer-centric system has been implemented so that customers participating in the campaign are informed that they have participated in a draw for the deposits they have at the bank, as soon as they come into a branch. The Cheques Performance Management is an excellent tool for the Bank’s Treasury to monitor the daily customer movements in terms of Remittances, incoming or outgoing, and Cheques. The analysis of remittances is broken down to outgoing and incoming and describes, at bank and customer level, which country and which bank the remittances of the Bank's customers were directed to, as well as from which country and bank they originate. The analyst is offered a range of options to filter and view real-time data, based on customer characteristics and/or transaction characteristics, with multi-dimensional and instant information. A similar analysis has been performed for cheques, offering an overview of the amounts issued or received by the Bank. The Asset Performance Management application, in its first phase, contains data on mutual funds managed by the Bank, with a breakdown at the ISIN level of the mutual fund and the house. It provides daily detailed information per portfolio, customer and transaction level, giving analysts the opportunity to shape the results according to their choices and needs, so as to go further in their conclusions. The application analyses customer transactions in currency and gold. Special emphasis was placed on providing information about the Bank's Agricultural Sector. This was achieved through the creation of new multidimensional information structures (cubes) and through the enrichment of existing structures with specific indicators for farmers and agricultural products. Additional reports were made available at the new Business Centres of the Agricultural Sector. An upgraded Business Intelligence (BI) Portal has been made available, providing, amongst others, a unified information environment for the entire Bank Network. It is now possible to create dynamic or standardized analyses and reports through modern Self Service BI technologies. The new multidimensional information structure (cube) for Cash Management, a project that had started in 2015, was completed and put into use.

Regulatory Compliance SystemsA new mechanism has been developed in the Bank’s Anti-Money Laundering system for updating the World-Check platform, ensuring better control and more effective detection and correction of possible failures. The Account Registry has been significantly enhanced with additional information, in order to make it possible to serve massive Special Secretariat for Financial and Economic Crime Unit (SDOE) requests in addition to online Messages. A specialized Liability Management System was implemented for the detailed management and monitoring of the obligations towards the Supervisory Authorities. In the context of obligations towards the General Secretariat of Public Revenue (GSPR) for sending files about individuals under investigation, a specialized procedural framework has been established to harmonize the Bank’s applications with GSPR rules, to receive bulk requests and to send details about products, movements, relationships, and customer data identified, for both deposit, term, loan and investment products.

Operation & Technological Infrastructure

Branch Network InfrastructureImprovement of Branch InfrastructureAiming to improve customer service, the new Paperless cashier platform has been launched, whereby the e-signature may be activated at the teller. The number of printed documents is significantly reduced. In total, during the first phase, 202 tablets were installed in 53 Branches of the Piraeus Bank Network. For the needs of the e-Signature project, 957 tablets were installed in the province network. Overall, e-Signature tablets have been installed in 3,547 positions in the entire Branch Network. The use of the NemoQ management system for queuing times has been expanded to 170 Branches, along with the upgrade to the new version, which provides centralized management and reporting, as well as the ability to provide customers with additional services. The XIBO Promotional Advertising System has been extended to 34 network branches to promote the Group's products.

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Collaborative communications application in the BranchesThe Jabber application solution has been developed to improve network communication. Jabber improves the usability of telephone devices, contributing significantly to the teleworking of employees with features such as chat, click to call, list of incoming and outgoing calls, etc. The Jabber application solution was rolled-out throughout the branch network and is used both within the branch as well as between branches.

Communication line upgradeAiming at improving the availability of automatic trading systems (ATMs, APS and BIO) and consequently the availability of services, the network infrastructures were upgraded at the off-site points of presence of the Bank. Now all points use both wired and wireless communication, ensuring maximum connectivity with the central systems.

ATMsAiming to improve the services provided to customers and ensure the operation of ATMs, a series of interventions was completed. In particular:

• Enhancement of ATM network with the installation of a second ATM at 17 points, 2 in new branches and 123 in newoffsitepoints.Inaddition,therewere91ATMwithonlinedeposit installations, bringing the total up to 342 ATM (30% of the ATM network at the branches).

• Enhancement of the presence and operation of the APS / BIO / SPP network with the installation of 90 newBankInOffice(BIO)machines.Ofthese,40werewithdoubledepositor and 50 BIO mini.

• Expansion of the network of automatic passbook printers (SPP) as part of the paperless cashierproject.

• InstallationoftwoTTWAPSpilotstoimprovecustomerservice,enablingpayments at non-banking hours.

• UpgradeofUnixforAPS(atotalof392devices)andPrintecAPS(atotalof175points)with POS terminals installation in order to give customers the ability to pay by card.

• Installation of terminal security system to increase ATM network security and protect againstATMskimmingandmaliciousinterference.Installationoftherequiredhardwareandsoftwaretoprotectthenetworkfromattacksaimedatremovingmoney by intervening in the counting mechanism.

• Design,constructionwithpartnerandinstallationofthefirstspecializedsystemsfornew types of transactions such as coin deposit, prepaid card delivery machine, remote cashier (VideoTeller).Thefirstsystemswereinstalledinthethreenew e-branches that opened at the end of the year.

Technological Infrastructure Upgrade of IT CentresConsistent with the objective of continuously improving the availability and performance of the Bank's Technological Infrastructure and for the efficient and safe management of their operations, a series of interventions was carried out, the most important of which are: The AS/400 (production and back-up) systems were upgraded to new hardware (E880) for improved resource management, increased response speed, new architecture/capabilities, and cost savings. The network equipment of the two main Data Centres were upgraded, modernized with improved features. The new networking systems support 10G speeds for improved performance and have increased availability features due to the new architecture and improved operating system. The first implementation of the BIG DATA infrastructure for the Bank was completed, namely a platform that can serve the modern needs of maintaining, managing and processing a large volume of data.

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The first output test was conducted on the migration of all winbank historical log data. The results were impressive as the following were achieved:

• Significantreductionofspacerequirementsincentralizedandcostlyenterprise storage systems.

• Significantreductionofdataretrievaltime.• Significantdecreaseinflowcompletiontime.

In order to meet the increased needs for backup following the merger of the Banks and the new supervisory requirements, the operational backup infrastructure was replaced by new state-of-the-art technology. The benefits from the new infrastructure are multiple:

• Instant availability of backups.• Backup copy also maintained in a location outside the Primary Data Centre.• Significanttime-savingintheoverallbackupprocess.• Significantreductionindatarecoverytime.

The storage area network (SAN) was replaced by new modern technology both at the Primary Data Centre and the Disaster Recovery Data Centre. Replacement achieved:

• Improved performance of critical applications (winbank, ATMs) in high-load conditions.• Improved time for replication of all critical applications at the Disaster

Recovery Data Centre. • Implementation of new automated processes for managing disk storage.• Significantreductioninenergyrequirements(coolingandpowerconsumption)

aswellasinstallationrequirements.

Improvements in IT Systems Security A number of projects were carried out to ensure the uninhibited operation of infrastructure, monitoring and limiting of threats and the data security:

• A PC link control service was developed in the Bank's internal network (using the 802.1x network security standard), which improves the security of the IT infrastructure by denying access to unauthorized systems.

• Development of a Privilege Identity Management in central infrastructure for controlling andrecordinguseraccessestocriticalBankapplications.Themainbenefitsareensuringthe integrity of the Bank's data and maximizing the proper functioning of all critical infrastructures.

• Development of a system for monitoring and recording system compliance with security andfairoperatingpolicies.Withthisapplication,thereareconstantchecksonserveroperating parameters such as:

• Security updates • Anti-virus software (Symantec Antivirus) • Backup software (EMC Networker) • Operating system version • Domain names and certificates expirations

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IT Systems SecurityIn 2016, a series of projects and system installations were completed, targeting maximum protection of the Bank’s IT system infrastructure and of its customers.

Security Checks of IT System and InfrastructurePeriodic and ad-hoc checks were performed as part of the security checks of the IT systems of the Bank and of the subsidiaries in Greece and abroad. Specifically, the Bank’s specialized engineers and external contractors in e-banking applications performed repeated execution of penetration tests and vulnerability assessments to the Group’s websites, applications, servers and databases.

Optimization of Existing and Installation of New Security SystemsGiven the continually developing requirements for both system and data security, the existing security systems were re-evaluated, redesigned and upgraded regarding the level of security. The Bank uses "24x7 Security Monitoring" and "Advanced Cyber Threat Management" services to ensure timely detection and handling of different categories of incidents and attacks, where the logs of critical security systems are sent to SOC (Security Operations Centre) and monitored on a 24-hour basis. The IT Security division of Piraeus Group is immediately informed of any security incidents, so that the appropriate actions are taken and the necessary protection measures are implemented. Additionally, protection against DDoS (Distributed Denial of Service) attacks has been upgraded for all of the Bank's online content by activating the Infrastructure DDoS Protection service.

PCI DSS Certification (Payment Card Industry Data Security Standard)The Bank's certification under the International Standard PCI DSS (Payment Card Industry Data Security Standards) was updated by an independent specialized company. The international certification PCI DSS pertains to the safeguarding of credit card transactions and of cardholder data. The Bank was certified under the PCI DSS/v3.1. This certification is a recognized standard and a compliance obligation for those involved in card data management, such as including retailers, financial institutions, organizations and companies. The certification provides additional levels of assurance and confidence to Bank customers, shareholders and partners.

ISO/IEC 27001 Certification for IT CentreThe IT centre has been certified with the ISO/IEC 27001 Information Security Management Systems Standard. The Bank has been receiving this certification every year since 2010. In 2015 the Bank was certified under the new 2013 version of the standard. This certification is an internationally recognized standard whereby businesses and organisations certify their installed Information Security Management Systems, and covers the broader spectrum of the design, implementation, management and operation of information security processes and measures. This certification increases the levels of security and confidence for the Bank's customers and shareholders.

Support for Piraeus Group SubsidiariesOn the one hand, aiming to harmonize the operation of IT Security Officers of domestic and foreign subsidiaries with the Group's standards and policies, and on the other hand, optimizing the Group's security level, the Group IT Security Office provided advisory services throughout the year. Specifically, there was continuous communication with the IT Security Officers of the subsidiaries and information on local security projects, policies, processes and implementation of measures to address new vulnerabilities.

Risk AssessmentIn the context of implementing the Security Framework and the ISO 27001/2013 and PCI DSS/v3.1 standards, a risk assessment exercise was carried out for all the Bank's IT resources with particular emphasis on those set up in the Main Computer Centre. A specialized methodology was used, based on internationally recognized practices and methodologies. Particularly in 2016, it was fully aligned with the RCSA, so as to meet the requirements of ISO and PCI standards.

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Employee IT Security AwarenessIn order to reduce risks and meet the requirements of the ISO 27001/2013 and PCI DSS / v3.1 standards, training seminars were held to raise the awareness of the Bank's staff on security issues. The seminars were held in Central Bank buildings in Athens and the periphery. Additionally, training material was developed to support the e-learning seminar, the main objective of which is to inform and interact with the concept of cyber-security, cyber-threats and cyber-attacks that one can encounter, and the measures one can take to protect his/her computer.

Technological and Organizational Support to International Subsidiary Banks In 2016 the upgrading of the IT systems of all its subsidiaries abroad continued (Piraeus Bank Romania, Piraeus Bank Bulgaria, Tirana Bank, Piraeus Bank Beograd Piraeus Bank Ukraine, London branch, Frankfurt branch). Particular emphasis was placed on upgrading the operational and development platform Atlas ERP Financial Management System of the subsidiaries in Albania, Bulgaria, Romania and Cyprus. Priority was also given to requirements from the Central Banks of the countries in which the subsidiaries operate. The centralization of the SWIFT infrastructure management of the London and Frankfurt branches was also significant.

Funds Transfer

Cash ManagementIn 2016 the Bank continued its efforts to enhance its cash management infrastructure. In the first quarter of 2016, the fifth Cash Management Centre was put into operation in the city of Heraklion, Crete. The state-of-the-art Cash Management Centre, which is expected to contribute substantially to the optimization of cash management in the region, was designed to fully cover the region's ever-increasing needs, particularly during the summer season, equipped with modern cash management and security systems and staffed with specialized staff. The stabilization of the political and economic environment coupled with the Bank’s efforts to further penetrate the market and attract new customers, contributed to the significant increase in cash inflows from the network of Piraeus Bank's Cash Management Centres, up 28% compared to the previous year. The results of the branch network’s efforts to optimize cash management were spectacular. For 2016, the cost of cash transfers of the network dropped by more than 4%, while the amount of money in the network dropped by 32%. This drop in the cost of servicing cash transfers allowed the Bank to contain its total cost of cash transfers, which was marginally above 2015 levels (+2%), despite the fact that more than 180 new Offsite ATM, APS and Bank in Office automatic deposit machines were installed.

Cash ServicesThe innovation, experience and credibility linked to Piraeus Bank's brand name were clearly reflected in the very positive financial results of cash management services. The number of corporate customers requiring the Bank’s specialized cash management services increased by 47% in 2016, with total revenues from these services increasing by 54%. The fact that the Bank in Office, which is Piraeus Bank’s unique advantage, since it is the only bank that offers a similar product in the Greek market, is particularly appreciated. In particular, the installed base of the Bank in Office service in 2016 tripled, while the recurring revenues from the service increased by 142%.

Funds TransferIn 2016 the capital control regime for cash withdrawals and movement of capital continued. Piraeus Bank, having adapted its systems and processes in 2015, responded fully to the demanding supervisory framework and successfully followed the challenges of the new reality by achieving multiple goals. As expected, the restriction on cash usage led consumers to switch to electronic transactions and to gradually change their transactional habits. This continued in 2016, and resulted in an increase in the number of customers (individuals and businesses) that paid their obligations through remittances and respectively, in a spectacular increase of the work relative to 2015, especially of domestic remittances. Real-time "IRIS Online Payments" were adopted by Greek banks, guiding towards this direction. Technology and smart

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devices made it possible for capital transfers to be carried out from one Greek bank to another in just a few seconds. In their implementation by Piraeus Bank, they were further enriched with new features that upgraded the transaction experience, facilitating trading relationships and recognizing the demanding conditions under which businesses and individuals are now moving. The dynamic entry of the IRIS online payments service and its warm welcome lead to the identification of the evolving needs that create market trends and the flexibility and the reflexes of Piraeus Bank. In the constant effort to interpret market needs, Piraeus Bank has introduced a comprehensive solution for the management of the "Bills of Exchange Collection Service" of its customers, contributing to a smoother flow of receipts and payments, with a high response from customers. In particular, the Bank enters into the position of the company, taking over entirely the management of its bills of exchange portfolio, from custody to the final stage of the payment process. Overall, the operations of Funds Transfer posted an increase of 49% in electronic remittances and 36% in non-electronic remittances, with commissions also increasing by 22%. Once again, automation of transactions has highlighted quality in service and has been recognized through international distinctions. The automation rate in Euro-based transactions reached 100% and US dollars-based transactions 99%, highlighting the Bank's consistency in quality and respect for customer needs.

2015 20162014

200,885

451,365

542,903

30,537

46,238

52,008

Outgoing Remittances – Number of Customers

Corporate Customers Individual Customers

2015 20162014

1,667,928

2,890,345

4,307,385

510,274

688,169

934,193

Outgoing Remittances – Number of Transactions

Non Electronic RemittancesElectronic Remittances

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Centralized Support OperationsIn 2016, the Unit's overall effort to provide high quality services to its internal and external customers continued, with its firm commitment to continuous improvement, through improved organization of day-to-day operations, optimal utilization of available staff, shorter processing applications time and finally revision/optimization of processes and technological infrastructures. The year was characterized by particularly large volumes of transactions with regard to distress warrants where a further increase of the incoming documents to 107% was noted compared to 2015 and to Securing public interest where the respective increase was 17% while there was a decrease as expected in the Customer CRS Code Merger. The Index for e-Management of confiscations rose to a remarkable 85% from 55% in 2015, due to the inclusion in the electronic confiscations mechanism of IKA & KEAO, which contributed positively to the Unit's productivity. In 2016, two major infrastructure projects were completed related to the management of distress warrants and the automation of the commitments of future debits for confiscations, while major automations were implemented in the management of the modifications (cancellations, restrictions, etc.) and in the reimbursments for confiscations.

Custody Services The Bank’s Custody Services is a market leader in the domestic market offering a comprehensive set of high-quality services in post-trading following the latest trends in financial markets and the regulatory changes. Custody services are provided to Greek and foreign customers ensuring their access to all categories of investment products, both in Greece and abroad. In 2016, despite the persistantly uncertain environment, Custody Services in cooperation with Securities Services expanded the scope of its activities with additional penetration and provision of innovative services to domestic private property management companies, thus increasing its customer base and strengthening the Bank's income. During the year, efforts continued to improve operational efficiency by automating systems, reviewing processes, minimizing the risk of errors and reducing management costs. The flexibility, adaptability and active response to challenges led to the provision of best possible service to institutional and private customers in the environment of investment constraints. The keys to success remained the specialized personnel, the customer-centric orientation, the synergies with the Bank's Units, the qualitative customer service and the effective cooperation with market institutions. The excellent quality of post-transaction activities was confirmed for another year with Custody and Administration of Securities being named "Market Outperformer" and "Category Outperformer" by internationally renowned Global Custodian magazine.

Back Office-Piraeus Financial MarketsUpgrades to the Unit's IT infrastructure and continuous efforts to improve processes to increase productivity and minimize errors continued throughout 2016. These efforts resulted in a significant reduction in the Unit’s operating expenses, as there were staff departures - either through participation in the staff VES or because they moved to other Bank units - accounting for 15% of the total unit’s employees, without disturbing the Unit’s efficient operation and the quality of service to customers in the slightest.

Organizational Interventions and Central Support The most important challenges for the Bank in 2016 for the Organization unit were to enhance efficiency and ensure high-quality operations by adopting new technologies, innovative methods to improve speed, quality of service and customer experience. The projects implemented by the Organization unit in 2016, on the one hand, were in line with the Bank’s strategic position and business objectives and, on the other, supported the following main axes:

• OperationalsupportfortheBranchNetworkandUnitstoachievetheirbusinesstargets.• ReductionofoperatingcostsbyimprovingtheefficiencyoftheBank'sproceduresandprocesses.• Introduction of newcustomerservicemethodsandtoolsaimingatsimplification

and automation of processes. • Assuranceofthequalityofdata.• Operational excellence based on innovation and use of modern technology.

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• Operationalefficiencyaimingatmaximizingcustomersatisfaction.• Adoption of mechanisms that identify and prevent operational failures and elimination thereof.• Bank'scompliancewithincreasingsupervisoryrequirements.

Improvements to Basic Processes and Operations The implementation of the e-signature technology at the Bank's branch tellers has optimized customer service, while contributing to the reduction of paper used and minimization of time used for processing tasks. At the same time, a number of improvement interventions were carried out to minimize errors in cash management. The full integration of the Bank’s branch network into the new functionality is expected to be completed in December 2017. Service Level Agreements (SLA) were developed between the Bank's Units, in accordance with the Operational Effectiveness (performance monitoring framework of processes for provision of main products and services), aiming at speedier customer service. In order to effectively monitor the implementation of the agreed service objectives, a reporting mechanism was developed at each stage of the process or as a whole (end to end). Also, the "Service Level Agreements" for mortgage and consumer loans, credit cards and POS processes, as well as the real estate legal inspection process, came into force. The study was completed to identify areas of improvement in the management of mortgage and mortgage-related parties insurance contracts. The project was launched for the creation of a central database for keeping and monitoring insurance policies. Improvements have been made to the implementation and management of safe deposit boxes, focusing on faster customer service and avoiding loss of revenue. Significant results of these improvements were automated printing of contractual documents, production of reports and automation of rental payments. A significant part of the resources was devoted to redesigning the processes for restructuring the loan portfolio and for monitoring borrower transfers between the performing Portfolio Management Units and the Restructuring Portfolio Management Units. By continuing to strengthen the infrastructure and processes for the disposal of represented UCITS by the Bank and managed and represented UCITS by Piraeus Asset Management Mutual Funds, the division participated in the design, coordination and implementation of the new distribution system (Dividends of represented UCITS). In addition, it participated in the development of automatic infrastructure for the reception of orders from co-operating securities companies with the Bank to Piraeus Asset Management Mutual Funds UCITS. Finally, the entire framework for investment services was revised, aiming at the simplification of the contractual terms and consequently the significant reduction of pages in the contractual documents, thus achieving a more efficient service of the Bank's customers. In addition, infrastructure has been upgraded and created so as to automatically produce and send the annual statement of securities accounts held to Customers, in order as part of improving the information provided to Customers.

Automation and IT Support of Basic OperationsParticular emphasis was placed on the development of new automated processes as well as on the improvement of existing ones by utilizing the APPIAN platform, which covers a wide range of banking operations, as more than 1.3 million requests were handled in 2016. Thus, the first phase of the automation project of the most frequent operational risk events was completed. The process of ordering, checking and approving cheque books, the process of property legal inspections, the process of legitimation of inheritance rights were automated. The real-time credit processing mechanism for accounts where the joint account-holders are distress warrant debtors has been implemented. Finally, the automated Merchant Acquiring management process was extended to cover the process from the initial expression of interest up until the collaboration with merchants for POS terminals use to greatly improve the level of Bank's services and expedite customer service. An important task for 2016 was the creation of a new computerized platform for the submission and management of loan applications by commercial retailers. The new platform (Key2Business) provides an extremely simple user-friendly, efficient and direct service to the Bank's business partners. In developing this platform, the unit was responsible for coordinating, designing, recording operational specifications, performing quality control, preparing the relevant documentation and providing operational support at its initial stage of implementation. At the same time, aiming to significantly reduce the time of handling Business Clients, the unit took on the redesign of the processes for servicing and handling requests, initially to SME borrowers of the Bank's performing portfolio. The new FAST TRACK request management platform emerged from the redesign. The new platform has been integrated

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into the LOS and focuses on the automation of many tasks, most notably application assessment, in which the Bank's credit policy rules are fully reviewed automatically. The implementation of the new platform has greatly contributed to accelerating applications assessment, freeing time by up to 90%. In addition, for the unit of collections/management of commissions regarding bank's loan portfolio (business and retail), the division has implemented a series of sub-projects for the review and collection of commissions. Early recovery actions were automated, resulting in a significant increase in revenues. Aiming to provide more efficient customer service, the division proceeded with the redesign and automation of application management processes, for modifying information on performing loans through the BPM Credit Express platform. The processes that have been implemented concern the management and monitoring of changes in the parties involved, the replacement of insurance policies, the amendment of due date, the replacement of collateral, etc., leading to a reduction in operating costs and to more effective monitoring of the work. In addition, aiming to improve the management of the Bank's loan portfolio, the portfolio managed by OSYATE was transferred to the Bank’s central loan management system. In order to improve the Custody Services, the relevant infrastructure was developed to automate the system for the Collection of Custodian Service Fees. At the same time, the infrastructure has been upgraded to support the on-line management of Investor Share and Securities Accounts in the Dematerialised Securities System (DSS) of Hellenic Exchanges, in compliance with the new DSS operating rules. In addition, the Bank is planning to develop a new dividend payment mechanism, using interbank infrastructures, to be fully implemented in 2017. An important automation project was the development of an integrated reporting system for managing stock exchange transactions, so as to monitor instances of market manipulation. In order to collect and process the information required in managing the Business Continuity Plan, a special application developed in the SharePoint platform was put in use to facilitate the e-transfer of files, the approval process and, moreover, to ensure the recording and easy search of their history.

Implementation of the Institutional Framework and Support of the Modernization of the State MechanismIn accordance with the provisions under L. 4370/2016 related to the Hellenic Deposit and Investment Guarantee Fund (HDIGF -TEKE), the Organization unit adapted the systems and processes and produced new Electronic Records in the Customer-centric System (TEKE). It also developed mechanisms to inform customers of the new Deposit Guarantee Scheme before they open a new deposit or loan account, and at least once a year, through all the available service channels. In accordance with the Foreign Account Tax Compliance Act (FATCA), a special functionality has been developed in the Bank's customer-oriented system, in order to record data about Customers-Legal Entities, for which there is evidence indicating US-person status for tax obligations. In the context of reporting to supervisory bodies, special reports were prepared for (a) the ECB on Money Market transactions and (b) the BoG on the Monthly Deposit Inflows-Outflows and the Bank's various exposures. In accordance with the decisions of the Ministry of Finance, the records of customers, products and movements of all the consolidated banks (Piraeus and merged banks), corresponding to 1,200,000 VAT numbers over the period 2001-2014, were mounted onto the Bank Account and Product Registry. In order to serve the Social Solidarity Income Programme (KEA), the Organization unit participated in the design and creation of automated processes for the issuance of prepaid cards and the execution of payments. In support of the institutional decisions of the EPC (European Payment Council), it has adapted the systems and processes to implement the new revised SEPA Rulebooks (Single Euro Payments Area).

New Products/Services and Payment TransactionsIn the context of adapting the Bank's product and service portfolio to market conditions, the Organization unit recorded the technical specifications for application development, conducted a review of operations and prepared processes and instructions for the Branch network to support new products and services. Particular emphasis was placed on time deposit products, payment services and transactions and investment products. In particular, in the context of attracting deposits, a series of time deposit products have been developed, infrastructure has been set up for reward schemes and services ("Thank you", "Yellow" reward scheme) and new Mutual Funds have been introduced into new and existing third party Mutual Fund Management Firms. In addition, the Organization unit coordinated the planning and development actions of the New Farmer’s Credit

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Card and the Contract Banking Agribusiness Programme and ensured the full coordination and the necessary guidance of the Bank's Branch Network, for the immediate and qualitative provision of service to customers. For payment services and transactions, new transactions were developed for more than 400 new partnerships and the Easypay Point Direct service was expanded to 500 new merchants. In addition, infrastructure for the new MyBank Service, which is a pan-European e-payment solution, has been created for online payments via real-time debit of deposit accounts.

Loan & Restructuring Administration In 2016 the Loan Administration Unit move towards adapting the needs of Greek and European supervisory frameworks, actively taking actions to improve the collaterals and guarantees, with emphasis on risk weighted assets, while adopting new practices to optimize customer service and Its contribution to the Bank's financial performance. In this context, all sub-units participated during the year in projects involving:

• Reporting on the basis of audits carried out by the SSM, ECB, BoG, the Parliamentary InquiryCommittee,andtheMinistryofFinance.

• Optimization of coverage and collateralisation of the Bank's systems with the participation ofallunitsintheprojectofpropertyunification.

• Inclusionofthecollateraldomainasthefirstpilotareaforthedevelopmentandimplementationofdatagovernanceprocessesandtheinitiationofrecordingactions,KPIsand data governance processes for collateral and data management for the whole Bank (theprojectwillbecompletedin2017).

• Preparing for audits to be carried out in 2017 and for the framework that will apply following the Bank's adoption of IFRS9-PMI2.

• CostAllocationTransparencyasacostunitwithitsallocationtotheBank’svariousprofitvalue cells, based on the current VBM Cost Allocation.

• Design Operational Reporting, Business Activity Monitoring Operational Dashboards and creatingKPIforLoanManagementwithapeakofmonitoringrestructuringanddesigningSLA within the forthcoming year for the customers of Corporate Centers and SB, accordingtostandardsofexistingfrommid2016SLAforretailcustomers(bothprojectswill be completed in 2017).

• DesignaprocessandspecificationsforcreatingacentraldatabaseofInsuranceContractsfor improving follow-up.

• During 2016, the active engagement of management in the communication and service of the Business Centre (SME) customer was decided and implemented, both for active customers as well as Restructuring customers, to make use of experience and know-how. It is a newphilosophywithadualpurpose,ontheonehand,providingthehighestqualitycustomerserviceand,ontheotherhand,efficientlymanagingtheirrequeststothebank.

In 2016 Loan Administration successfully played its institutional role of managing the Bank's loans and restructured loans in the best possible way, so as to achieve the greatest possible financial result and to provide the best possible customer service.

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Risk Management

Management places particular emphasis on the effective monitoring and management of its undertaken risks, on a consolidated and stand-alone basis, with a view of maintaining stability and continuity of operations. The prudent application and constant development of the risk management framework is a priority and is taken into account during the Group’s business and strategic planning process. The BoD is responsible for developing and supervising the implementation of the risk management framework. The Risk Management Committee, as a committee of the BoD, convenes on a monthly basis and/or ad hoc, develops the risk management framework in alignment with the Group's business objectives and monitors the effectiveness of the Risk and Capital Strategy, as well as the capital adequacy requirements against the level and type of risks undertaken. During 2016, the Risk Management Committee held 14 meetings in total. In addition, the Group Executive Committee monitors the implementation of the Business Plan and the Restructuring Plan of the Bank and the Group and takes the necessary decisions to achieve the objectives set and proposes the Annual Budget to the Bank’s BoD. Group Risk Management is administratively independent from the other units of the Bank. The unit carries out responsibilities of Risk Management and Credit Risk Control in accordance with the BoG Governor Act No 2577/2006 and CRD IV regulatory framework. The BoD appoints the Head of the Group Risk Management (Group Chief Risk Officer, CRO) upon recommendation of the Risk Management Committee and his appointment or replacement following the approval of the Risk Management Committee is communicated to the Bank of Greece. The CRO acts as the Executive Secretary of the Risk Management Committee and is a member of the Group Executive Committee and of all the Bank’s major Executive Committees. In the Senior Credit Committee, the Assets & Liabilities Management Committee (ALCO), and the Recovery Credit Committees, the CRO preserves a veto right in cases of disagreement for breach of the Bank’s approved Risk and Capital Strategy. The responsibilities of the main Executive Committees in which the CRO is involved are presented in the internal Regulations of Corporate Governance and Operating Structure. The Group has established detailed processes and adequate risk control mechanisms for identifying/managing/monitoring/reporting risks. This ensures independence between risk taking, risk management and control functions. The existing organizational structure ensures separation of responsibility and aims to prevent instances that could lead to conflicts of interest. Through the Risk and Capital Strategy, the principles of an integrated risk management and risk assumption framework are aimed to achieve the Group's strategic and business objectives as determined by the BoD, without exceeding the risk taking ability. The risk management framework is constantly evaluated and evolving, taking into account the current economic environment, the Bank's business plans and historical database, the market dynamics, the supervisory and regulatory requirements, the Group's Corporate Governance Framework, international best practices and the shareholders’ interests. The effectiveness of the risk management framework is assessed through:

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• aparallelassessmentoftheGroup'sfinancialresultscomparedtothebusinessobjectivesanditsriskprofileascomparedtotheriskassumption,

• a set of indicators/measurements per type of risk monitored by Group Risk Management, • theKeyPerformanceIndicators(KPIs)monitoringprocessestablishedbytheHFSF.

In addition, the Group is supervised and evaluated by the competent authorities regarding corporate governance and the risk management framework. The Risk Management Division is responsible for the design, specialization and implementation of the risk management policies in accordance with the Risk Management Committee of the BoD, the head of which reports directly to the Risk Management Committee of the BoD. The Group Risk Management Division consists of the following Units:

• GroupCreditRiskManagementUnit• GroupCapitalManagementUnit• GroupMarket,LiquidityandOperationalRiskManagementUnit• Group Risk Coordination• Corporate Credit Control

The Division is subject to the independent audit of the Internal Audit Unit’s review in terms of the adequacy and effectiveness of the applied risk management processes. The Group Risk Management is also responsible for developing, implementing and periodically monitoring risk-adjusted methodology and infrastructure for pricing products and services, and training business units regarding their use. Thus, awareness is raised about the risks undertaken and a strong risk management culture is promoted in each hierarchical level of the Group. In addition, since November 2014 the Bank, along with the other Greek systemic banks, are supervised by the SSM, which consists of the ECB and the BoG.

Details about Group Risk Management, Pillar III 2016 Disclosure, www.piraeusbankgroup.com

Credit Risk ManagementThe Group’s operations entail the assumption of credit risk. Credit risk is the risk of financial loss for the Group resulting from the inability of counterparties to fulfil their contractual / transactional obligations. Credit risk is the most significant source of risk for the Group, therefore, its effective monitoring and management are one of Management’s top priorities. The Group’s overall exposure to credit risk mostly originates from the financing of Corporate and Retail Credit, from the Group’s investment activities, from trading in the derivative markets, as well as from the settlement of transactions. The degree of risk involved in each credit exposure depends on a number of factors, including the general economic and market conditions, the financial position of the borrowers, the amount, type and duration of the exposures, as well as the existence of coverage and collateral. The implementation of the credit policy, which describes the Group's credit risk management principles, ensures that credit risk is treated in a uniform and effective manner. Piraeus Bank Group applies a unified Credit Policy and Practice with respect to the assessment methods and processes for approving, renewing and monitoring credit. All credit limits are reviewed and/or renewed at least once a year, and the relevant approval levels are determined by the amount and the category of total credit risk assumed by the Group for each debtor or group of inter-related debtors (single debtor). Credit Risk Management belongs to Group Credit Risk Management. Its purpose is to monitor, review and measure the credit risk of Group exposures.

Credit Risk Measurement and MonitoringReliable credit risk measurement is a top priority within the Group's risk management framework. The continuous development of infrastructure, systems and methodologies for measuring and monitoring credit risk is a precondition for the timely and effective support of Management and Business Units in decision-making, policy formulation, and compliance with supervisory requirements.

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For the monitoring and measurement of credit risk entailed in the Group's loans and receivables at a counterparty level:

• the customer’s creditworthiness and the probability of defaulting on their contractual obligations is systematically assessed; and

• the Group’s potential recovery rate is estimated in the event of the debtor defaulting on its obligations on the basis of existing collateral and guarantees provided.

The Group assesses the creditworthiness of its borrowers and assesses the probability of defaulting on their contractual obligations by applying credit rating models tailored to their special characteristics and features. These models combine financial and statistical analysis together with the expert advice of responsible officers and are tested wherever possible by benchmarking them against externally available information. According to the Group’s policy, each borrower is rated when their credit limit is initially determined and thereafter re-rated at least annually. Ratings are also updated in cases where new information emerges, that may have a significant impact on the level of credit risk. The Group tests at least annually the predictive capability of the creditworthiness evaluation and rating models, thus ensuring its potential of accurately depicting any credit risk and allowing for the timely implementation of measures addressing potential problems.

More specifically, for the measurement and monitoring of credit risk, loans and receivables are presented in detail in the 2016 Annual Report.

Credit Limit Management and Credit Risk Reduction TechniquesThe Group manages, reviews and limits the amount and concentration of credit risk by applying a credit limit system that determines the maximum acceptable risk. Additionally, limits are set and applied for exposures to credit institutions. The Group’s aggregate exposure to the credit risk of borrowers, including credit institutions, is further monitored by the application of sub-thresholds that cover on and off-balance sheet exposures. Collaterals and guarantees that reduce the level of risk are taken into account when determining customer credit limits. The Group classifies credit risk by type of associated coverage or collateral and the ability to liquidate them. The maximum credit limits, which can be approved by risk category, are determined by the Board of Directors. Across the Group, no credit is approved by a single person, except for consumer loans and credit cards, provided that the criteria set out in Credit Policy and Practice are met, as approval by three executives is generally required. Depending on the level of risk, approval limits have been set up, the role of which is particularly important in shaping the overall quality of the Group's loan portfolio. Credit limits for Piraeus Group are valid for up to twelve months and are subject to annual or more frequent review. The competent or senior approval team may, when there are special circumstances, opt for a credit period of less than twelve months. Outstanding balances are monitored versus established limits on a daily basis, and any excess is reported and dealt with on time.

Impairment and Provisioning Policy The Group assesses on a regular basis whether there is reasonable and objective evidence that a financial asset is impaired. To this extent, the Bank performs an impairment test at each financial statement date, for the purpose of creating adequate provisions coverage, in accordance with the general principles and methodology described in International Financial Reporting Standards (IFRS). An asset has been impaired if its carrying amount is greater than its expected recoverable amount. The recoverable amount is determined by the total present value of expected cash inflows and of the liquidation of any collateral/guarantee in the event of the borrower's inability to repay the loan. When there are indications that the Group will not be able to collect all due amounts set out in the contractual terms of an asset, provision is made for the impairment of the asset. The impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. Impairment estimation and provisioning are carried out individually at loan level for all loans that the Group considers significant and collectively at the level of the group of loans for all other cases. For the Bank significant loans are loans that exceed €1 mn at the borrower level, while for the Group the significance depends on the size of the loan portfolios of each subsidiary. Impairment is collective for receivables (debt portfolios) with common risk characteristics, which on an individual basis are not considered significant. The receivables that have not been impaired individually are also evaluated collectively.

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Risk Based PricingThe models applied in evaluating customer credit rating were the key tools in the Risk-Based Pricing methodology developed and applied to the Group’s corporate and retail portfolios. By taking credit risk into account in loan pricing, the Group aims to generate revenue surplus to cover expected and unexpected risks, as well as to depict the profitability of its services in a more complete and accurate manner. At the same time, it promotes a strong risk management culture in each hierarchical level of the Group. The table below depicts the evolution of the Loans in arrears > 90 days ratio.

Loans in arrears>90 days ratio* 38% 40%

Greece 37% 40%

International Operations 39% 41%

Greek Banking Market (average) 36% 36%

Piraeus Bank Group 31.12.2016 31.12.2015

* Data does not include the seasonal agri–loan facility to OPEKEPE.

Forbearance and Restructuring PolicyThe Group adopted the Implementing Technical Standards (ITS) of the European Banking Authority (EBA) on forborne loans, in alignment with the BoG Executive Committee Act No. 42/30.5.2014, on the "Supervisory framework for the management of loans in arrears and non-performing loans". The alignment of the Group’s Restructuring Policy with the relevant EBA definitions and BoG guidelines, was backed up with the creation of new structures and processes, the development of new information systems and modification of existing applications, aiming at the effective and reliable management of loans in arrears, with viable restructurings and with the monitoring of the effectiveness of forbearance measures. Forborne loans are all loans, for which there has been a change in the contract terms or a refinancing on more favourable terms, due to borrower’s current or expected financial difficulty, and which would not have been granted to other debtors with a similar risk profile. According to EBA technical standards, a forborne exposure can cease being identified as such after at least two-three years since it started to be considered performing. For an exposure to be reclassified as performing, there should be no delays, the counterparty must not be assessed as unlikely to pay its obligations, must not be impaired again, and also regular payments of more than an insignificant amount must have been made during at least the last twelve months. Loans in forbearance status are assessed for impairment either individually or collectively, according to the Bank’s impairment and provisioning policy. The Recovery Banking Unit (RBU) manages the loans in arrears, aiming to find the appropriate viable restructuring solution for each borrower, to ensure fair treatment of all borrowers and to maximize value for the Group. Customer-driven models are used towards this goal, such as "decision trees", pilot measurements and results evaluations on selected samples of the portfolios and appropriate processes and forbearance types are applied according to the number of days past due and the risk undertaken. The NPL Supervision and Management Council, which inter alia is responsible for the management strategy of loans in arrears, collaborates with the Group’s Risk Management Division to arrive at a common understanding and to develop the appropriate methodology to assess the risk of the RBU portfolio. Risk Management monitors the forbearance process and assesses the relative risks by portfolio and forbearance type. More specifically, the Credit Risk Management Division is responsible for monitoring the Bank’s NPLs management strategy and the RBU’s effectiveness. In particular, the Division is responsible for:

• Monitoringtheevolutionofbasicfiguresbyportfolio,independentlyandinlinewith thepredefinedNPEtargetssubmittedtoSSMandHFSF.

• OperationalefficiencyofNPEs,ensuredby: • monitoring viability and evolution of the restructurings,

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• tracking cash collection rates and auctions, • monitoring evolution of write-offs and loan sales, • analysis of individual portfolios to identify "effective/ineffective" restructuring types for

specific portfolios, • tracking high-risk portfolio segment.• LiaisingwiththeRBUinordertocommunicatetheirresultsandidentifypotential

corrective actions.• ProvidingtacticalandadhocupdatestotheDivisionsandCommitteesconcerned

regardingNPEmanagement.

The Group Chief Risk Officer is updated on a monthly basis about the evolution of RBU portfolio and reports regularly to the Risk Management Committee.

Capital AdequacyPiraeus Bank Group’s capital is defined by Directive (EU) No. 2013/36 and Regulation (EU) No. 575/2013, as approved by the European Council (CRD IV/CRR).Under the supervisory framework, credit institutions are required to report common equity tier 1 capital (CET 1).

Common Equity Tier 1 (CET 1) €9.0 bn

Tier 1 €9.0 bn

Risk Weighted Assets* €53.3 bn

Capital Adequacy Ratio 17.0%

Common Equity Tier 1 Capital Ratio 17.0%

Leverage Ratio 11.1%

*On and off balance sheet assets

Capital Adequacy Selected Data 2016

During the year 2016, a project for creation of automated reports was completed for reporting needs in the context of completing Common Reporting (COREP) and Financial Reporting (FINREP) through Moody's Analytics' new upgraded Risk Authority platform. The Bank has also completed projects to strengthen its risk, capital and risk measurement policies, processes and methodologies within the Basel Pillar II framework. Their implementation is related to the Internal Capital Adequacy Assessment Process (ICAAP) as well as the stress tests programme on Capital Adequacy. In the context of optimizing risk measurement methods and capital employment, and aligning with best international practices, the Bank is implementing a project plan, for its transition to the Internal Ratings-based (IRB) Approach on credit risk. It is a transformation project for the Bank and is expected to bring significant benefits to its operation model and its management of the credit cycle. Group Capital Management continues to implement projects regarding optimisation of the methods of monitoring and estimating risks and capital employment, as well as for credit risk reduction practices. The Unit participates in the exercises for assessing the quantitative impact of future adjustments on capital adequacy, such as the new Standardized Approach on Credit Valuation Adjustment (CVA) and the Fundamental Review of the Trading Book. It also participates in the revision of the risk appetite framework and of the risk tolerance limits, as well as in the update of the Group Restructuring and Recovery Plans. Finally, the Unit provides know-how and support to the Group’s Business Units and subsidiary companies in matters of compliance with the current supervisory and regulatory framework and best capital management practices.

Liquidity RiskThe liquidity risk experienced by a financial institution is the risk that it will not be able to meet its financial obligations when they become due.

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Piraeus Bank recognizes that the effective management of liquidity risk contributes substantially to the ability to meet its financial obligations, without the potential for significant financial losses. A unified Liquidity Risk Management Policy is applied across the Bank, in accordance with internationally applied practices and supervisory arrangements and is adapted to the individual operations and organizational structures of Piraeus Bank. This policy describes the key definitions and methodologies for assessing liquidity risk, defines the roles and responsibilities of the units and executives involved, provides instructions for dealing with liquidity crisis situations and defines a Liquidity Crisis Management Statement, which is implemented in the event of a liquidity crisis. Piraeus Bank calculates the "Liquidity Coverage Ratio" and "Net Stable Funding Ratio" on a monthly and quarterly basis respectively, as defined by Regulation (EU) No. 575/2013, in the framework of Implementation of Basel III on a European level and the harmonization of the EU Single Rulebook. In addition, under Directive (EU) No. 2013/36, credit institutions must have integrated strategies, processes, policies and systems that ensure adequate monitoring of liquidity risk. In April 2016 Market Risk and Liquidity Management submitted to the SSM for the first time the report on the Internal Liquidity Adequacy Assessment Process (ILAAP), which contains the processes governing liquidity risk management, as well as the main results of the assessment of the Bank’s current and future liquidity position. As part of the ICAAP and ILAAP processes stress testing scenarios have been examined and their impact on the position and mandatory liquidity ratios has been assessed. The Bank's financing structure improved in 2016, as total liquidity from Central Banks (ECB and ELA) decreased by €11.8 bn, mainly due to the increase in deposits by €3.0 bn, the increase in funds raised through the Repo interbank market by €4.2 bn, and the sale of EFSF bonds of €3.7 bn under the ECB's public sector purchase programme (PSPP). Finally, long-term funding from the ECB (TLTRO) increased to €4.0 bn compared to €2.7 bn in 2015, improving the maturity profile of the Bank's financing.

Market RiskMarket risk is defined as the risk of incurring losses due to adverse changes in the level or the volatility of interest rates, currency exchange rates, equity prices and commodity prices. The Bank estimates the market risk for the positions in the trading book, using Value at Risk (VaR). The VaR measure is an estimate of the maximum potential loss in the net present value of a portfolio, over a specified period and within a specified confidence level. The Bank implements the parametric Value-at-Risk methodology, over one day and within a 99% confidence level. The Value-at-Risk rate for the Bank’s Trading Portfolio on 31.12.2016 was €0.81 mn. This estimate consists of €0.37 mn VaR for interest rate risk, €0 mn for equity risk, €0.82 mn for foreign exchange risk and €0 mn for commodity risk. The diversification effect for the total portfolio on 31.12.2016, resulted in a €0.38 mn reduction to the overall trading portfolio’s VaR. VaR is at a low level and within the risk taking levels.

2016 0.81 0.37 0.00 0.82 0.00 -0.38

2015 3.81 2.81 0.00 2.68 0.00 -1.68

2014 4.15 3.33 0.00 2.64 0.07 -1.88

Amounts in €mn

Bank’s Transactions

Trading Portfolio - Total

VaR

Interest Rate Risk

EquityRisk

Foreign ExchangeRisk

CommodityRisk

DiversificationEffect

Piraeus Bank applies an interest rate risk management policy and adopts risk assessment techniques based on the Interest Rate Gap Analysis. Interest Rate Gap Analysis allows for the assessment of interest rate risk through the "Interest Earnings-at-Risk" measure, which expresses the negative impact on projected annual interest rate over a specified period caused by a change in interest rates across all maturities and currencies. In addition, Piraeus Bank measures its interest rate risk through the expected change in the net present value of Assets and Liabilities caused by a change in interest rates by 100 basis points (PV-100). The table below depicts interest risk sensitivity analysis, according to the Interest Rate Gap Analysis for total Balance Sheet (Trading & Banking Books).

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PV-100 -32.8 5.9 0.6 -1.3

PV 100 - Effect on NPV 41.9 -5.5 0.5 1.3

EaR-100 -180.3 -9.2 -4.2 1.1

EaR - Effect on NII 108.0 7.5 4.1 -1.5

Interest Rate Gap Sensitivity Analysis

(amounts in €mn) EUR USD CHF Other

Operational RiskOperational Risk is defined as the risk of loss resulting from the inadequate or failed internal processes, systems and people or from external events. Identifying its exposure to operational risk, Piraeus Bank Group implements an effective integrated operational risk management framework across its operations, which is regularly updated. In 2016, the Group mitigated operational risks by updating the relevant business systems and processes, and adopted a focused approach on the operational risk management of its units, aiming at improving its operational risk profile. In addition, in 2016 the Operational Risk Management Unit of the Group implemented a series of actions that focused on improving the framework and the management of operational risk. Briefly, these actions were:

• Improvement of infrastructure with the selection and installation of Operational Risk Management systems.

• Improvement of processes and systems for the collection and management of operational risk losses & incidents (ongoing, expected completion in 2017).

• The operational risk mitigation mechanisms were updated (update of Business Continuity Plan and the insurance coverage extension).

• The Group’s Operational Risk Policy was updated.• Revisionofprocedurefordevelopmentandmodificationofproducts.

Overall, with the implementation and development of the operational risk management framework, the Group aims to optimize its operations and control mechanisms, to minimize financial losses from operational risk events, to develop a uniform and clear culture across all Group levels, to assess the level of exposure to risk, and to prevent potential, unexpected and catastrophic losses from future operational risk events.

Group Risk CoordinationThrough the Risk Coordination Unit, the Group supervises its subsidiaries and banking operations in Greece and abroad, focusing on the harmonization of the Risk Management Framework and practices across the Group. In particular, the unit evaluates the overall risk management framework of the subsidiaries, which includes strategy, policies and processes/methodologies per risk category. In addition, the unit coordinates and participates in the formulation and regular updating of Group Risk Management processes, such as Risk & Capital Strategy, Risk Appetite Framework and Risk Based Pricing. In this framework, there is close collaboration with the Group’s relevant units, constant communication and support is provided to subsidiaries, site meetings are organized and corrective actions and practices are proposed and monitored on a regular basis.

Corporate Credit ControlThe Corporate Credit Control Unit is responsible for the independent ongoing assessment of the quality of the Group’s corporate loan exposures, and for monitoring of credit risk procedures, in accordance with the Group's Policies and Practices, through random sample checks. For this purpose, it runs checks across a sample of borrowers per business unit and reviews the suitability of credit limits and policy, in relation to the level and form of assumed risk, as well as the effectiveness of the practices and

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methodology applied, aiming at the effective and qualitative monitoring of the progress of the assumed credit risk at portfolio level. This review is made by using data extracted from the Bank’s systems, by conducting detailed reviews of the credit files held in the business units, and by holding meetings with the assigned officers. The end product of each review is an Assessment Report, which is used to inform the CRO, the Senior Management and the Risk Management Committee. On a regular basis, the unit proposes corrective actions and practices that are deemed necessary. The review involves all the business units supporting the promotion-development-management of the NPL business portfolio and the credit units. It covers a range of activities, starting from credit risk assumption, to monitoring credit risk evolution and to dealing with borrowers with a high probability of default. Corporate Credit Control review scope does not include defaulted loans, loan administration or monitoring of contractual loan documents, collaterals/guarantees. In this context, 23 reviews were carried out in 2016, using a sample of 1,800 borrowers from the Group's business portfolio, with balances amounting to €6.3 bn.

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Selected Consolidated Balance Sheet Information (€ thousand)

Total Assets 31.12.2016 31.12.2015

Cash and Balances with Central Bank 3,071,788 3,644,821

Loans and Advances to Credit Institutions 118,859 179,523

Reverse Repos with Customers 30,005 641

Loans and Advances to Customers (Net of Provisions) 49,707,608 50,591,193

Trading Securities 13,246,257 16,985,336

Financial Instruments at Fair Value Through Profit or Loss 193,861 240,398

Investment Securities 2,746,880 2,739,869

Other Assets 12,382,715 11,957,782

Assets from Discontinued Operations 2,562 1,594,414

Total Assets 81,500,534 87,933,978

Liabilities

Due to Credit Institutions 27,020,940 34,490,583

Customer Deposits 42,364,829 39,357,642

Debt Securities 69,515 102,314

Other Liabilities 2,220,030 2,478,030

Liabilities from Discontinued Operations 1,483 1,484,883

Total Liabilities 71,676,796 77,913,452

Shareholders’ Equity 9,663,623 9,907,644

Non-Controlling Interest 160,115 112,882

Total Equity 9,823,738 10,020,526

Total Liabilities and Equity 81,500,534 87,933,978

Note: 2015 figures have been restated to include an amount of €0.4 bn related to time deposits of the Investment Cover Scheme and the Supplementary Deposits Cover Fund of the TEKE.

Business Report 141

Selected Consolidated P&L Information (€ thousand)

Number of Employees and Branches

31.12.2016 31.12.2015

Number of Employees 18,995 20,719

Number of Employees Stemming

from Discontinued Operations 14 520

Branches 921 989

1.1 - 31.12.2016 1.1 - 31.12.2015

Net Interest Income 1,810,713 1,877,220

Net Fee & Commission Income 325,742 305,659

Dividend Income 8,792 8,200

Results from Financial Instruments at Fair Value

Through Profit or Loss and Investment Portfolio 161,983 109,429

Other Operating Income 58,821 92,599

Total Net Income 2,366,052 2,393,107

Total Net Income on a Recurring Basis 2,289,151 2,393,107

Staff Costs (627,511) (771,908)

Administrative Expenses (583,945) (588,995)

Depreciation and Amortization (110,611) (111,778)

Total Operating Expenses (1,322,067) (1,472,681)

Share of Profit of Associates (18,169) (12,766)

Profit Before Provisions and Impairment 1,025,815 907,660

Profit Before Provisions and Impairment

on a Recurring Basis 967,084 1,031,780

Provisions and Impairment (1,193,597) (3,837,613)

Profit/(loss) Before Tax (167,781) (2,929,953)

Income Tax 158,966 1,068,562

Profit/(loss) after Tax

from Continuing Operations (8,816) (1,861,390)

Profit/ (loss) after Tax

from Discontinued Operations (31,327) (34,606)

Less: Profit/ (loss) for Non-Controlling Interest 5,156 3,148

Profit/(Loss) after Tax Attributable

to Shareholders (34,987) (1,892,848)

Profit/(Loss) after Tax Attributable

to Shareholders from Continuing Operations (3,664) (1,858,220)

Total Comprehensive Income after Tax

from Continuing Operations (73,692) (1,769,231)