HELLENIC BANK GROUP - · PDF file3 HELLENIC BANK GROUP Condensed Consolidated Income Statement for the six-month period ended 30 June 2017 Six-month period ended 30 June Note

HELLENIC BANK GROUP

Condensed Consolidated Financial Statements

for the six-month period ended 30 June 2017

2

HELLENIC BANK GROUP Condensed Consolidated Financial Statements for the six-month period ended 30 June 2017

Contents

Page

Condensed Consolidated Income Statement for the six-month period ended 30 June 2017

3

Condensed Consolidated Income Statement for the three-month period 1 April 2017 to 30 June 2017

4

Condensed Consolidated Statement of Comprehensive Income for the six-month period ended 30 June 2017

5

Condensed Consolidated Statement of Comprehensive Income for the three-month period 1 April 2017 to 30 June 2017

6

Condensed Consolidated Statement of Financial Position at 30 June 2017 7

Condensed Consolidated Statement of Changes in Equity for the six-month period ended 30 June 2017

8-9

Condensed Consolidated Statement of Cash Flows for the six-month period ended 30 June 2017

10

Notes to the Interim Condensed Consolidated Financial Statements 11-48

Interim Management Report for the six-month period ended 30 June 2017 49-54

Declaration by the Member of the Board of Directors and the Bank officials responsible for the drafting of the Condensed Interim Consolidated Financial Statements

55

3

HELLENIC BANK GROUP Condensed Consolidated Income Statement for the six-month period ended 30 June 2017

Six-month period ended 30 June

Note

2017 €'000

2016 €'000

Turnover 149.977 152.160

Net interest income 66.327 74.735 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income 23 62.170 56.297

Total net income 128.497 131.032

Total expenses 5 (76.672) (72.282) Profit from ordinary operations before impairment losses and provisions to cover credit risk 51.825 58.750

Impairment losses and provisions to cover credit risk 6 (77.627) (48.750)

(Loss)/profit before taxation (25.802) 10.000

Taxation 7 2.917 (8.897)

(Loss)/profit for the period (22.885) 1.103

(Loss)/profit attributable to:

Shareholders of the parent company (23.383) 704

Non-controlling interest 498 399 (Loss)/profit for the period (22.885) 1.103

Basic and diluted (loss)/earnings per share (€cent) 8 (11,78) 0,36

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HELLENIC BANK GROUP Condensed Consolidated Income Statement for the three-month period from 1 April 2017 to 30 June 2017

Three-month period from 1 April to 30 June

2017 €'000

2016 €'000

Turnover 82.959 82.039

Net interest income 32.550 37.003 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income 39.823 34.301

Total net income 72.373 71.304

Total expenses (37.623) (35.289) Profit from ordinary operations before impairment losses and provisions to cover credit risk 34.750 36.015

Impairment losses and provisions to cover credit risk (50.313) (27.151)

(Loss)/profit before taxation (15.563) 8.864

Taxation 2.758 (8.453)

(Loss)/profit for the period (12.805) 411

(Loss)/profit attributable to:

Shareholders of the parent company (12.871) 369

Non-controlling interest 66 42 (Loss)/profit for the period (12.805) 411

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HELLENIC BANK GROUP Condensed Consolidated Statement of Comprehensive Income for the six-month period ended 30 June 2017


Note

2017 €'000

2016 €'000


Other comprehensive income/(expenses)

Items that will not be reclassified in the income statement

Taxation relating to components of other comprehensive income (20) (59)

(20) (59)

Items that are or may be reclassified subsequently in the income statement

Surplus on revaluation of investments in equity and debt securities available for sale 17 18.726 2.423

Transfer to the income statement on disposal of investments in equities available for sale -- (12.381)

Amortisation of revaluation of reclassified debt securities available for sale 17 (74) (393)

18.652 (10.351)

Other comprehensive income/(expenses) for the period net of taxation 18.632 (10.410)

Total comprehensive expenses for the period (4.253) (9.307)

Total comprehensive (expenses)/income for the period attributable to:

Shareholders of the parent company (4.744) (9.744)

Non-controlling interest 491 437

(4.253) (9.307)

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HELLENIC BANK GROUP Condensed Consolidated Statement of Comprehensive Income for the three-month period from 1 April 2017 to 30 June 2017

Three-month period from 1 April to 30 June

2017 €'000

2016 €'000

(Loss)/profit for the period (12.805) 411

Other comprehensive income/(expenses)

Items that will not be reclassified in the income statement

Taxation relating to components of other comprehensive income (26) 37

(26) 37

Items that are or may be reclassified subsequently in the income statement

Surplus on revaluation of investments in equity and debt securities available for sale 12.079 2.193

Transfer to the income statement on disposal of investments in equities available for sale -- (12.381)

Amortisation of revaluation of reclassified debt securities available for sale (1) (185)

12.078 (10.373)

Other comprehensive income/(expenses) for the period net of taxation 12.052 (10.336)

Total comprehensive expenses for the period (753) (9.925)

Total comprehensive (expenses)/income for the period attributable to:

Shareholders of the parent company (825) (9.981)

Non-controlling interest 72 56

(753) (9.925)

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HELLENIC BANK GROUP Condensed Consolidated Statement of Financial Position at 30 June 2017

30 June

2017 31 December

2016

Note €'000 €'000

Assets

Cash and balances with Central Banks 2.055.023 2.083.444

Placements with other banks 475.713 548.902

Loans and advances to customers 9 2.780.154 2.926.033

Debt securities 10 1.068.655 1.149.132

Equity securities & Collective Investment Units 16.361 16.008

Investment in Associate company 23 6.811 --

Property, plant and equipment 12 99.809 99.648

Intangible assets 12 30.670 26.526

Tax receivable 80 127

Deferred tax asset 13 11.709 8.465

Other assets 14 209.312 179.319

Total assets 6.754.297 7.037.604

Liabilities Deposits by banks 114.655 100.652

Customer deposits and other customer accounts 5.805.383 6.111.088

Tax payable 5.431 5.422

Deferred tax liability 13 2.032 1.980

Other liabilities 124.511 111.924

6.052.012 6.331.066

Loan capital 15 139.667 139.667

Equity Share capital 16 99.237 99.237

Reserves

459.508 464.252

Equity attributable to shareholders of the parent company 558.745 563.489

Non-controlling interest 3.873 3.382

Total equity 562.618 566.871

Total liabilities and equity 6.754.297 7.037.604

Contingent liabilities and commitments 820.988 854.887

Dr E. A. Polykarpou

Chairman of the Board of Directors

I.A. Matsis Chief Executive Officer

L. Papadopoulos Chairman of the Audit Committee of

the Board

L. Kramer Chief Financial Officer

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HELLENIC BANK GROUP Condensed Consolidated Statement of Changes in Equity

for the six-month period ended 30 June 2017

Attributable to shareholders of the parent company

Share capital (Note 16)

Reduction of share

capital reserve

Share premium

reserve

Revenue reserve

Translation reserve

Revaluation reserve

(Note 17)

Total

Non-controlling interest

Total

€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Balance 1 January 2017 99.237 260.269 515.609

(349.168)

33

37.509

563.489

3.382

566.871

Total comprehensive (expenses)/ income for the period net of taxation

(Loss)/profit for the period -- -- -- (23.383) -- -- (23.383) 498 (22.885) Other comprehensive

income/(expenses) -- -- -- -- -- 18.639 18.639 (7)

18.632 Transfer due to disposal of immovable property -- -- -- 429 -- (429) -- --

--

Transfer of excess depreciation on revaluation surplus -- -- -- 24 -- (24) -- --

--

-- -- -- (22.930) -- 18.186 (4.744) 491 (4.253)

30 June 2017 99.237 260.269 515.609

(372.098)

33

55.695

558.745

3.873

562.618

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HELLENIC BANK GROUP Condensed Consolidated Statement of Changes in Equity for the six-month period ended 30 June 2017

Attributable to shareholders of the parent company

Share capital

Reduction of share

capital reserve

Share premium

reserve

Revenue reserve

Translation reserve

Revaluation reserve

Total

Non-controlling interest

Total

€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 Balance 1 January 2016 99.217 260.269 515.592

(286.013)

39

50.493

639.597

3.199

642.796

Total comprehensive income/(expenses) for the period net of taxation

Profit for the period -- -- -- 704 -- -- 704 399 1.103 Other comprehensive

(expenses)/income -- -- -- -- -- (10.448) (10.448) 38

(10.410)

Transfer of excess depreciation on revaluation surplus -- -- -- 146 -- (146) -- --

--

-- -- -- 850 -- (10.594) (9.744) 437 (9.307)

30 June 2016 99.217 260.269 515.592

(285.163)

39

39.899

629.853

3.636

633.489

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HELLENIC BANK GROUP Condensed Consolidated Statement of Cash Flows for the six-month period ended 30 June 2017


2017 €'000

2016 €'000

Cash flow from operating activities


Adjustments to profit for the period 40.821 33.444

Operating profit before working capital changes 17.936 34.547

Working capital changes (256.362) (288.663)

Cash flow used in operations (238.426) (254.116)

Tax paid

(285) (132)

Net cash flow used in operating activities (238.711) (254.248)

Cash flow from investing activities

Net proceeds from the sale of Non-Performing Loan and Real Estate Management Business 23 12.748 --

Acquisition of associate company 23 (6.811) --

Income from investments in debt and equity securities 15.064 12.611 Net (additions)/disposals/maturity of investment in debt and equity securities

100.258 116.985

Additions less proceeds from disposal of property, plant and equipment and intangible assets (7.983) (5.499)

Proceeds from disposal of assets held for sale 42.871 11.935

Net cash flow from investing activities 156.147 136.032

Cash flow from financing activities

Interest paid on loan capital (120) (415)

Net cash flow used in financing activities (120) (415)

Net decrease in cash and cash equivalents

(82.684) (118.631)

Cash and cash equivalents at the beginning of the period

2.493.682 2.787.955

Cash and cash equivalents at the end of the period

2.410.998 2.669.324

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Notes to the Interim Condensed Consolidated Financial Statements The Condensed Consolidated Financial Statements for the six-month period ended 30 June 2017 have not been audited by the external auditors of the Group.

1. General information Hellenic Bank Public Company Limited (the “Bank”) was incorporated in Cyprus and is a public company in accordance with the provisions of the Companies Law Cap. 113, the Cyprus Stock Exchange Laws and Regulations and the Income Tax Laws. The Bank’s registered office is located at 200, Corner of Limassol and Athalassa Avenues, 2025 Strovolos, P.O. Box 24747, 1394 Nicosia. The Bank is the holding company of Hellenic Bank Group (the “Group”). The principal activity of the Group is the provision of a wide range of banking and financial services, which include financial, investment and insurance services, custodian and factoring services as well as management and disposal of properties. The Condensed Consolidated six-month Financial Statements (hereafter refer to as “Financial Statements”) comprise of the Financial Statements of Hellenic Bank Public Company Limited and its subsidiary companies, which together are referred to as the Group. 2. Significant accounting policies 2.1 Basis of preparation The Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34 “Interim Financial Reporting” as adopted by the European Union (EU) and should be read in conjunction with the Audited Consolidated Financial Statements for the year ended 31 December 2016. The Financial Statements are presented in Euro (€), which is the functional currency of the Group’s companies. All figures have been rounded to the nearest thousand, except where otherwise indicated. 2.2 Comparatives The comparative figures included in the Financial Statements are restated, where considered necessary, to conform with changes in the presentation of the current period. 2.3 Adoption of new and revised International Financial Reporting Standards (IFRSs) and interpretations The accounting policies adopted in respect of items considered material in relation to the Financial Statements are consistent with the accounting policies adopted in the Annual Report and Financial Statements for the year ended 31 December 2016, except for the adoption of new and revised standards, interpretations and amendments to existing standards with effect from the 1st of January 2017. The adoption of new and revised IFRSs, interpretations and amendments to existing standards did not have a material effect on the Financial Statements of the Group.

The following Standards have been issued and adopted by the EU but are not yet effective. The Group does not intend to adopt these standards prior to their effective date:

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Notes to the Interim Condensed Consolidated Financial Statements 2.3 Adoption of new and revised International Financial Reporting Standards (IFRSs) and interpretations (continued) IFRS 9 ''Financial Instruments'' (effective for annual periods beginning on or after 1st January 2018) In July 2014, the International Accounting Standards Board issued the final version of IFRS9 Financial Instruments which is effective from 1st January 2018. The following pronouncement has not been applied by the Bank in preparing these Interim financial statements as the Bank decided not to early adopt. As described below, IFRS 9 replaces the requirements set out by IAS 39 for recognition and measurement of both financial assets and liabilities. Classification and Measurement IFRS 9 requires that an entity’s business model and a financial instrument’s contractual cash flows will determine its classification and measurement in the financial statements. Upon initial recognition each financial asset will be classified as either fair value through profit or loss (‘FVTPL’), amortized cost, or fair value through Other Comprehensive Income (‘FVOCI’). Due to differences between IFRS 9 and existing IAS 39 requirements, some reclassifications among measurement categories are expected. For financial liabilities, IFRS 9 retains most of the existing requirements. However, for financial liabilities designated at fair value through profit or loss, gains or losses attributable to changes in own credit risk may be presented in other comprehensive income. Impairment Model The IFRS 9 impairment model will be applicable to all financial assets at amortised cost, debt instruments measured at fair value through other comprehensive income, lease receivables, loan commitments and financial guarantees not measured at fair value through profit or loss. IFRS 9 replaces the existing ‘incurred loss’ impairment approach with an Expected Credit Loss (‘ECL’) model, which would result in earlier recognition of credit losses compared to IAS 39 . The ECL model has three stages. Entities are required to recognise a 12 month expected loss allowance on initial recognition (stage 1) and a lifetime expected loss allowance when there has been a significant increase in credit risk since initial recognition (stage 2). Stage 3 requires objective evidence that an asset is credit-impaired, which is similar to the guidance on incurred losses in IAS 39. The requirement to recognise lifetime ECL for loans which have experienced a significant increase in credit risk since origination, but which are not credit impaired, does not exist under IAS 39. The Group will use three main components to measure expected credit losses which are a probability of default (‘PD’), a loss given default (‘LGD’) and the exposure at default (‘EAD’). In line with IFRS 9 impairment requirements, forward looking information, including current conditions and projections of macroeconomic factors, will need to be incorporated in a range of unbiased future economic scenarios which will potentially result in impairment changes being more volatile when compared to current IAS 39 requirements. IFRS 9 is estimated to result in an increase in the overall level of credit losses due to the requirement to record allowances equal to 12-months expected credit losses on those instruments whose credit risk has not significantly increased since initial recognition. Regulatory capital position While discussions on the longer-term regulatory treatment of provisions are on-going, a proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 was issued regarding the transitional period for mitigating the impact on own funds of the introduction of IFRS 9. If the IFRS 9 provision adjustment will be phased-in over a period of 5 years as proposed, then any impact on CET 1 will be spread out. Transition The Bank does not expect to restate comparatives on initial application of IFRS 9 on 1st January 2018 but will provide detailed transitional disclosures in accordance with the amended requirements of IFRS 7. IFRS 9 Implementation Programme During the year 2016 and beginning of 2017, the Bank engaged with external consultants who carried out a current state gap analysis as well as a preliminary quantitative impact study (QIS). The high level gap

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Notes to the Interim Condensed Consolidated Financial Statements 2.3 Adoption of new and revised International Financial Reporting Standards (IFRSs) and interpretations (continued) analysis pointed to the Bank’s gaps in implementing the IFRS 9 requirements whereas the QIS provided an indication of the IFRS 9 impact provision-wise. Overall, the result of this exercise indicated that the Group’s profitability and regulatory capital position will be negatively affected, though the impact is not expected to be significant. Beginning of 2017, and with the engagement of external consultants, the Group established the “IFRS 9 Implementation Programme” in order to ensure timely compliance with the standard and other regulatory guidance. The project involves Finance, Risk and IT functions across the Bank and is monitored closely by an executive team. The key deliverables of the project include defining IFRS 9 methodology and accounting policy, development of Expected Credit Loss (ECL) models, identifying and implementing data and system requirements, and establishing an appropriate operating model and governance framework. While the implementation programme is progressing in line with the delivery plans, the Group is not yet in a position to provide a reliable estimate of the potential impact on the profitability and regulatory capital position until the project is further advanced and the interaction between IFRS 9 and capital rules are finalized. The final impact will depend on the facts and circumstances that will exist on 1st January 2018.

IFRS 15 ''Revenue from contracts with customers'' (effective for annual periods beginning on or after 1st January 2018)

The new standard may have a significant effect on how and when entities will recognise revenue from contracts with customers. IFRS 15 replaces the IAS 11 “Construction contracts”, IAS 18 “Revenue”, IFRIC 13 “Customer Loyalty Programmes”, IFRIC 15 “Agreements for the Construction of Real Estate”, IFRIC 18 “Transfers of Assets from Customers” and SIC-31 “Revenue - Barter Transactions Involving Advertising Services”. The standard provides a single principles-based model to be applied to all contracts with customers and two approaches to the recognition of revenue: at a point in time or over time. The adoption of this standard is not expected to have a material effect on the Financial Statements of the Group.

3. Use of estimates and judgements The preparation of Financial Statements requires Management to make use of judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances and the results of which form the basis of making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Therefore, they involve risks and uncertainties as they relate to events and depend on circumstances that will occur in the future. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and in future periods if the revision affects both current and future periods. The accounting policies that are deemed critical to the Group’s results and financial position and which involve significant estimates and judgments are set out below: 3.1 Provision for impairment of loans and advances to customers The Group reviews the loans and advances to customers to assess whether impairment losses should be recognised in the income statement and accumulated in an impairment loss reserve.

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Notes to the Interim Condensed Consolidated Financial Statements 3. Use of estimates and judgements (continued) The Group assesses whether there is objective evidence of impairment of the loan portfolio on an individual and collective basis. Indicatively, the following events may be considered by the Group as an evidence of impairment. However, one event alone may not constitute evidence of impairment while the absence of a specific event does not preclude the existence of impairment:

1) Credit facilities classified as non-performing 2) Restructured credit facilities included in performing loans and advances

3) Significant and sustained reduction of total income/future cash flows of the borrower

4) Apparent deterioration of the debt servicing capacity of the borrower

5) The possibility of the debtor's insolvency

6) Significant reduction in the value of collateral

7) Credit facilities with internal credit rating that represents high credit risk

8) Credit facilities which are pending renewal, violating the relevant credit policy of the Bank

9) Macroeconomic indications that may affect the expected future cash flows of the borrowers such as

increase in unemployment rates and decline in real estate prices. The loan portfolio which is assessed on an individual basis includes significant loans of economic groups that are above certain thresholds set by the Bank in accordance with the provisions of the Central Bank of Cyprus Directive on Loan Impairment and Provisioning Procedures as well as all credit facilities to: (i) Shareholders with holdings in excess of 10% of the Bank’s share capital and their connected persons. (ii) Members of the Board of Directors of the Bank and their connected persons. (iii) Key Management personnel and their connected persons. The amount of impairment loss on the value of loans and advances to customers which are examined on an individual basis, is measured as the difference between the carrying amount of the credit facility and the present value of estimated future cash flows, discounted at the credit facility’s original effective interest rate. In cases where the interest rate of the loan is variable, the original effective interest rate is measured with reference to the initial margin corresponding to the current base rate of the interest rate and the value of the current base rate at the reporting date. The estimated future cash flows are based on assumptions about a number of factors and therefore the actual losses may be different. To determine the amount of impairment loss on the value of loans and advances to customers, judgment is involved regarding the amount and timing of estimated future cash flows. The estimated future cash flows include any expected cash flows from the borrowers operations, any other sources of funds and the expected proceeds from the liquidation of collateral, where applicable. The timing of these cash flows is estimated on a case by case basis. Loans and advances assessed on an individual basis and for which no impairment loss is recognised are assessed on a collective basis. In addition, loans and advances that are below the materiality threshold for individually assessment, are assessed on a collective basis for impairment losses. For the calculation of impairment loss on a collective basis, loans and advances are grouped based on similar credit risk characteristics and appropriate models are applied that take into account the recent historical loss experience of each group with similar credit risk characteristics adjusted for current conditions using appropriate probabilities of default and loss given default. Restructured facilities are classified in separate groups with higher risk parameters. These calculations include estimates and the use of judgment to supplement, assess and adjust accordingly the historical information and past experience events which determine the parameters and calculation of

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Notes to the Interim Condensed Consolidated Financial Statements 3. Use of estimates and judgements (continued) impairment losses as at the reporting date. The main assumptions used to estimate loss given default relate to the treatment of property collateral such as the time needed for collateral liquidation and the liquidation discount at the point of sale. For loans and advances assessed individually, the specifics of each case are taken into consideration in determining the property parameters. The Bank has taken significant steps in enhancing its provisioning methodology. Since 2016, the Bank improved its property collateral database that allowed a more granular approach in provisioning. The new collateral information which was incorporated both in collective and individual provisioning takes into account the specificities of the properties by segmenting them into various property types and sub-types as well as by classifying them by district and location within each district. Different liquidation discounts are applied depending on the type and location of each collateral with the liquidation discount including cost ranging from 15% for a limited number of prime property types to 40% for non-prime properties. The resulting average liquidation discount for the collectively assessed portfolio is approximately 26% including costs. Further improvements to the collective provisioning methodology relate to the alignment to the status of the portfolio and the NPL management strategies pursued by the Bank with the collective provision assessment by differentiating the liquidation period assumptions. The average liquidation period of the non-performing collectively-assessed portfolio is currently approximately 4,8 years while for performing loans, the liquidation period assumption is 5 years. In addition, in June 2017 the Bank has proceeded with certain amendments to the parameters and assumptions for estimating the recoverable amount of property collateral values used in its provisioning methodology, relating primarily to the elimination of forward looking indexation in its collateral prices and the adoption of higher liquidation discounts at the point of sale for selected categories of non-prime properties. The amendments were made in the context of the International Financial Reporting Standards and take into account the Bank’s accelerated plans for resolving problem loans, latest market developments, as well as the ongoing regulatory engagement with the European Central Bank (“ECB”) as part of the 2017 Supervisory Review and Evaluation Process (“SREP”). Accumulated impairment losses of the Group's loans and advances are inherently uncertain due to their sensitivity to economic and credit conditions of the environment in which the Group operates. Conditions are affected by many factors with a high degree of interdependency and there is not one single factor to which these conditions are particularly sensitive. It is possible for the actual conditions in the next financial year to differ significantly from the assumptions made during the current year, so that the carrying amount of loans and advances could be adjusted significantly.

For the purposes of providing an indication of the change in accumulated impairment losses as a result of changes in key loan impairment assumptions, the Bank utilized the collective models on the total loan and advances portfolio with reference date 30 June 2017, to carry out a sensitivity analysis. The simulated impact on the provisions for impairment of loans and advances is presented below: Change on key assumptions

Increase/(decrease) on accumulated impairment losses on the total loan and

advances portfolio €' million

Increase the liquidation period by 1 year 28

Decrease the liquidation period by 1 year (28)

Increase the liquidation discount (i.e. reduce the recoverable amount from collateral) by 5%

40

Decrease the liquidation discount (i.e. increase the recoverable amount from collateral) by 5%

(37)

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Notes to the Interim Condensed Consolidated Financial Statements 3. Use of estimates and judgements (continued) 3.2 Provisions for pending litigations or complaints and/or claims or cases subject to arbitration proceedings In order to assess whether a provision must be recognised, the Group examines whether there is a present obligation (legal or constructive) as a result of a past event, for which an outflow of resources embodying economic benefits is probable and a reliable estimate for the amount of the obligation can be made. The Group obtains legal advice on the value of the provision of specific complaints and/or claims and arbitration. The amounts recognised as provisions are the best estimates of the expenditure required to settle the present obligation at the end of the reporting period. When a separate liability is measured, the most likely outcome may be considered the best estimate of the liability. Due to the risks and uncertainties surrounding the facts and circumstances of any pending litigations or complaints and/or claims or cases subject to arbitration proceedings, a significant degree of judgement is required for the estimation of the relevant outcome. 3.3 Impairment of goodwill and investments in subsidiaries The process of identifying and evaluating impairment of goodwill and investments in subsidiaries is inherently uncertain because it requires significant Management judgement in making a series of estimates, the results of which are highly sensitive to the assumptions used. The review of impairment represents Management’s best estimate of the factors below. Firstly, significant Management judgement is required in estimating the future cash flows of the acquired entities. The values are sensitive to the cash flows projected for the periods for which detailed forecasts are available, and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. The cash flow forecasts are compared with actual performance and verifiable economic data in future years. However, the cash flow forecasts necessarily and appropriately reflect Management’s view of future business prospects. Additionally, the cost of capital used to discount future cash flows, can have a significant effect on the entity’s valuation. For Special Purpose Vehicles (SPVs), the principal indication of impairment is a decrease in the carrying value of the underlying properties as assessed by independent qualified real estate valuers. Any impairment of goodwill of the acquired entities affects the Group's results while any impairment of investments in subsidiaries affects the Bank's results. Present value of acquired in-force business (PVIF) are tested for impairmentannually, and when circumstances indicate that the carrying value may be impaired. When the recoverable amount is less than the carrying value, an impairment loss is recognised in the income statement. 3.4 Fair value of investments The best evidence of fair value of investments is a quoted price in an actively traded market. If the market for a financial instrument is not active, a valuation technique is used. The majority of valuation techniques employed by the Group use only observable market data and thus the reliability of the fair value measurement is relatively high. The Group uses models with unobservable inputs only for the valuation of non-listed investments. In these cases, the Group takes into account, amongst others, the net positions of the entities in which the investment has been made, as well as estimates of the Group’s Management to reflect uncertainties in fair values resulting from the lack of data and significant adverse changes in technology, market, economic or legal environment in which the entity operates. 3.5 Impairment of available for sale investments Available for sale investments in equity securities are impaired when there has been a significant or prolonged decline in their fair value below cost. In such a case, the total loss previously recognised in equity is recognised in the consolidated income statement. The determination of what is significant or prolonged requires judgment by Management. The factors which are taken into account in these estimates include the percentage reduction in the cost or impaired cost, as well as the net positions of the entities.

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Notes to the Interim Condensed Consolidated Financial Statements 3. Use of estimates and judgements (continued) Available for sale investments in debt securities are impaired when there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the investment and the loss event (or events) has an impact on the estimated future cash flows of the investment. The identification of impairment requires judgment by Management. An individual assessment of impairment is carried out on debt securities whose fair value as at the date of the financial position has significantly decreased as well as the issuer has been downgraded. 3.6 Properties held for sale/stock of properties held for sale Properties held for sale are measured at the lower of carrying amount and fair value less costs to sell. Stock of property is measured at the lower of cost and net realisable value. The estimated sales price is determined with reference to the fair value of properties. The fair value is established through valuations carried out by qualified real estate valuers who apply internationally accepted valuation models, use their market knowledge and professional judgement. This exercise, depending on the nature of the underlying asset and available market information, has a degree of uncertainty. The determination of costs to sell may also require professional judgement which involves a degree of uncertainly due to the relatively low level of market activity. 3.7 Taxation The Group is subject to corporation tax in the countries in which it operates. Estimates are required in determining the provision for corporation taxes as at the date of the financial position. There is the possibility of a change in the tax treatment of impairment losses on the value of loans and advances other than those concerning customers individually assessed, as indicated in correspondence from the office of the Commissioner of Taxation and contrary to the policy applied by the Bank to date. Where the final tax is different from the amounts initially recognised in the income statement, such differences will impact the tax expense, the tax liabilities and deferred tax assets or liabilities of the period in which the final tax is agreed with the relevant tax authorities. Deferred tax assets arising from tax losses are recognised to the extent that it is probable that the Group will generate future taxable profits against which these losses can be utilised. The recognition of deferred tax asset in respect of tax losses is based on judgements made in relation to the probability, sufficiency and timing of future taxable profits as well as the applicability of future tax planning strategies. These judgements rely on historical available information and estimations regarding, among others, macroeconomic conditions, changes in interest rates, real estate prices and demand, the level of the non-performing exposures and the expected results of operations based on the business model and strategic plan of the Group. The parameters underlying the judgements made are subject to uncertainty and may result in changes in the measurement of deferred tax asset compared to initial estimates. 4. Segmental analysis For management purposes, the Group is organised into two operating segments in Cyprus based on the provision of services, as follows:

• Banking and financial services segment - principally providing banking and financial services, including financing and investment services, as well as custodian and factoring services

• Insurance services segment - principally providing life and general insurance services The table below presents income, expenses, impairment losses and provisions to cover credit risk, (loss)/profit before taxation and information on assets and liabilities regarding the Group's operating segments.

18

Notes to the Interim Condensed Consolidated Financial Statements 4. Segmental analysis (continued)

Banking & Financial services

Insurance Services Inter-segment

transactions/balances

Total Six-month period ended 30 June Six-month period ended 30 June Six-month period ended 30 June Six-month period ended 30 June

2017 2016 2017 2016 2017 2016 2017 2016 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Turnover 141.781 144.486 10.070 9.601 (1.874) (1.927) 149.977 152.160

Net interest income 66.211 74.548 116 187 -- -- 66.327 74.735 Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income

55.345

49.745

7.698

7.244

(873)

(692)

62.170

56.297

Total net income 121.556 124.293 7.814 7.431 (873) (692) 128.497 131.032 Total expenses (73.210) (68.597) (3.527) (3.728) 65 43 (76.672) (72.282) Profit /(loss) from ordinary operations before impairment losses and provisions to cover credit risk

48.346

55.696

4.287

3.703

(808)

(649)

51.825

58.750 Impairment losses and provisions to cover credit risk (77.627) (48.750) -- -- -- -- (77.627) (48.750)

(Loss)/profit before taxation (29.281) 6.946 4.287 3.703 (808) (649) (25.802)

10.000


Insurance Services

Inter-segment

transactions/balances Total 30 June

2017 31 December

2016 30 June

2017 31 December

2016 30 June

2017 31 December

2016 30 June

2017 31 December

2016 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000

Total assets 6.678.961 6.969.543 101.449 88.467 (26.113) (20.406) 6.754.297 7.037.604

Total liabilities 6.153.566 6.437.010 63.423 54.489 (25.310) (20.766) 6.191.679 6.470.733

19

Notes to the Interim Condensed Consolidated Financial Statements 5. Total expenses Annual contribution to the Single Resolution Fund (SRF) As of 1st of January 2016, the European Union within the Banking Union framework has put forward a third pillar, a deposit insurance scheme (EDIS-European Deposit Insurance Scheme) which will gradually take over the national depositors’ protection scheme. The first pillar of the Banking Union consists of a common framework for supervision of banks implemented by the Single Supervisory Mechanism (SSM); the second pillar consists of a common framework for bank resolution implemented by the Single Resolution Mechanism (SRM). The SRM provides that the SRF will be built up over a period of 8 years with 'ex-ante' contributions from the banking industry.

On the 28th of April 2016 the Bank received a notification from the Central Bank of Cyprus stating that its 2016 contribution to SRF amounted to €3,1 million was payable until 27 June 2016. The 2016 annual contribution was paid by the Ministry of Finance from the annual contributions payable by credit institutions for the special levy imposed in accordance with the provisions of “Special Levy on Credit Institutions Law of 2011 to 2015”.

The contribution to the SRF for 2017, which was based on 31 December 2015 data and calculated in accordance with the Commission Delegated Regulation (EU) 2015/63 of 21st October 2014, was transmitted by the Singe Resolution Board (SRB) via the Deposit Guarantee and Resolution of Credit and Other Institutions Scheme (DGS). The Bank’s contribution to the SRF, which was payable on 26 June 2017, amounted to €2,0 million and was recognised in the administrative expenses. During November 2016 a draft Law of the “Special Levy on Credit Institutions Law (Amended) 2016” was submitted before the House of Representatives. The purpose of the draft law was to amend specific articles in the Law in order to provide for the deduction of the contributions from the amount of special levy and hence avoid duplicated contributions. The House of Representatives voted against the relevant draft law but a new draft law, together with some amendments is expected to be resubmitted during 2017. 6. Impairment losses and provisions to cover credit risk 30 June

2017 €'000

30 June 2016 €'000

Impairment losses on the value of loans and advances (see Note 9) 79.068 51.698

Provisions to cover credit risk for contractual commitments and guarantees (1.441) (2.948)

77.627 48.750

7. Taxation

30 June

2017 €'000

30 June 2016 €'000

Corporation tax (266) (264)

Taxes withheld at source (29) (54)

Deferred tax 3.212 (8.579)

2.917 (8.897)

According to the Income Tax Law 118(I)/2002 as amended, the Bank’s profit and that of its subsidiaries in Cyprus, is subject to corporation tax at the rate of 12,5%. Tax losses of Group companies in Cyprus can be offset against taxable profits of other Group companies in Cyprus and any tax losses not utilised can be carried forward and offset against the same entity’s taxable profits of the next five years. As of 1st January 2015 onwards cross-border relief is allowed in the case of losses of an EU subsidiary that has exhausted all other possibilities to use the said losses in its country of tax residence.

20

Notes to the Interim Condensed Consolidated Financial Statements 7. Taxation (continued) Profits earned by subsidiary companies and permanent establishments outside Cyprus are subject to taxation at the rates applicable in the country in which the operations are carried out. Tax exemptions, allowances, deductions and offsets pursuant to Articles 8, 9, 10 and 13 of the Income Tax Law 118(I)/2002 are taken into consideration for the calculation of the tax liability. According to the provisions of the Special Contribution for the Defence of the Republic Law, Companies that do not distribute 70% of their profits after tax, as these profits are defined by this Law, during the two years following the end of the year to which the profits refer, will be deemed to have distributed this amount as dividend. Special contribution for defence at 17% will be payable on such deemed dividends to the extent that, for the purposes of this Law, the shareholders (individuals and companies), at the end of the period of two years from the end of the fiscal year to which the profits refer are Cyprus residents and in the case of individuals, Cyprus domiciles as well. The amount of the deemed dividend distribution is reduced by any actual dividend already distributed in respect of the year to which the profits refer. The special contribution for defence is paid by the Bank on behalf of the shareholders. 8. Basic and diluted (loss)/earnings per share


Basic and diluted (loss)/earnings per share 2017 2016

(Loss)/profit attributable to shareholders of the parent company (€ thousand) (23.383) 704

Average number of shares in issue during the period (thousand) 198.475 198.435

Basic and diluted (loss)/earnings per share (€cent) (11,78) 0,36

As at 30 June 2017 there were no options or instruments convertible into new shares and so basic and diluted loss per share are the same. 9. Loans and advances to customers

30 June 2017 €'000

31 December 2016 €'000

Loans and advances to customers 4.203.064 4.300.117

Accumulated impairment losses

(1.422.910)

(1.374.084)

2.780.154 2.926.033

21

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) Accumulated impairment losses on the value of loans and advances

30 June 2017 €'000

31 December 2016 €'000

Individual impairment losses

On an individual and collective assessment basis

1 January 1.346.526 1.269.536

Contractual interest on impaired loans 79.044 164.001

Unwinding of discount (23.811) (58.680)

55.233 105.321

Net write-offs of loan impairment losses (79.674)

(156.138)

Charge for the period/year 79.233 123.972

Exchange difference (3.847) 3.835

50.945 76.990

30 June/31 December 1.397.471 1.346.526

Collective impairment losses

On collective assessment basis (IBNR)

1 January 27.558 33.587

Net write-offs of loan impairment losses (1.886) (4.372)

Release for the period/year (165) (1.737)

Exchange difference (68) 80

(2.119) (6.029)

30 June/31 December 25.439 27.558

Accumulated impairment losses 1.422.910 1.374.084

During the second quarter of 2017 the Bank proceeded with certain amendments to the parameters and assumptions for estimating the recoverable amount of property collateral values used in its provisioning methodology, relating primarily to the elimination of forward looking indexation in its collateral prices and the adoption of higher liquidation discounts at the point of sale. The amendments were made in the context of the International Financial Reporting Standards and take into account the Bank’s accelerated plans for resolving problem loans, latest market developments, as well as the ongoing regulatory engagement with the European Central Bank (“ECB”) as part of the 2017 Supervisory Review and Evaluation Process (“SREP”). Impaired loans and advances Represent the loans and advances for which the Group determines that there is objective evidence for impairment as a result of one or more loss events occurring after initial recognition and which have an impact on the estimated future cash flows as assessed either on an individual basis or on a collective basis. The resulting impairment loss is recognised under “Individual Impairment losses”. These loans and advances are classified in Grade 3 (high risk) based on the Group’s credit risk assessment system. Loans with renegotiated terms due to the deterioration of the financial position of the customer are usually considered impaired, if the Group determines that, according to the loan contractual terms, non-repayments of the total principal and contractual interest due is possible. Interest income on impaired loans and advances, which corresponds to their carrying amount, is recognised in the income statement for the period ended 30 June 2017 and amounted to €23,8 million (31 December

22

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) 2016: €58,7 million). The interest income which corresponds to the amount of the impairment loss, is suspended and included in the accumulated impairment losses on the value of loans and advances.

Non-impaired loans and advances The loans and advances which were not found to be impaired, are presented in risk categories based on the credit risk assessment system of the Group. The risk categories are as follows: Grade 1 (Low Risk): An immediate ability to repay the credit facility is assumed. Grade 2 (Medium Risk): The probability of indirect recovery of the credit facility is assumed. Grade 3 (High Risk): The debtor presents a higher risk compared to Grade 1 and 2 on the existence of direct and indirect recovery of the credit facility. Past due but not impaired loans and advances Represent non-impaired loans and advances for which the contractual interest or principal repayments are past due and the Group determines that there is no objective evidence of impairment by taking into account, among others, the value of available collateral. Collateral On the basis of the Group’s policy, the amount of credit facilities granted should be based on the repayment capacity of the relevant counterparties. Furthermore, policies are applied for the hedging and mitigation of credit risk through the holding of collateral. These policies define the types of collaterals held and the methods for estimating their fair value. The main collaterals held by the Group include mortgage interests over property, pledging of cash, government and bank guarantees, charges over business assets, mortgage interests over ships as well as personal and corporate guarantees. Property collateral relates to immovable commercial, residential and land real estate collateral. The open market value is indexed to today using publicly available indices. The indexations are monitored, validated and adjusted as necessary in order to accurately reflect the current market values of the property collaterals of the Bank. The value of tangible collateral for loans and advances classified as impaired both under Collective and Individual assessments amounted to €1.494 million as at 30 June 2017 (31 December 2016: €1.677 million). The value of tangible collateral for loans and advances past due but not impaired amounted to €131,2 million as at 30 June 2017 compared to €239,1 million as at 31 December 2016. The decreases are in line with the decrease on the impaired loans and advances to customers. Aiming at fulfillment of undertakings concerning harmonization with EU VAT legislation given by the Republic on accession to the EU, the Ministry of Finance has submitted to the Finance Committee of the House of Representatives draft legislation concerning imposition of VAT on transactions involving building land specified in the legislation or shares the ownership of which secures legally or actually the ownership or ownership by usufruct of such building land. Enactment of this legislation is expected in the forthcoming months and it is anticipated that it will adversely affect the value of land and buildings.This change could affect the provisioning exercise of the Group. At this stage there is no clarity on the scope and timing of the proposed changes to the VAT law. Forborne Exposures According to the European Banking Authority’s (EBA) technical standards, forborne exposures are (i) exposures which involve changes in their terms and/or conditions and (ii) the forbearance measures consist of concessions towards a debtor which aim to address existing or anticipated difficulties on the part of the borrower to service debt in accordance with the current repayment schedule. Changes in the terms and

23

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) conditions of a contract that do not occur because the customer is not able to meet the terms and conditions of the contract due to financial difficulties do not constitute forbearance measures (see details below). The most significant prerequisite for the forbearance of an exposure is the existence of customer repayment ability i.e. the customer is viable. The Bank’s Restructuring Policy includes the terms and conditions on which the Bank determines whether or not a renegotiated repayment schedule shall be granted. The forbearance measures to be taken and their duration thereof are determined on the basis of specific customer information, based on the prevailing economic conditions and in accordance with relevant legislation or regulatory Directives. The monitoring of forborne loans is performed by both, Business Units and the Credit Risk Management department. Every effort is taken by the Bank for the proper assessment of the new repayment schedule on the basis of the forbearance measures, in order to avoid a new default. Non-performing and forborne exposures according to the European Banking Authority’s (EBA) technical standards

The European Banking Authority (EBA) published in 2014 its technical standards with respect to non-performing and forborne exposures which were adopted by the European Commission (EC) through the commission implementation regulation (EU) 2015-1278. Exposures include all debt instruments (loans and advances and debt securities) and off-balance sheet exposures, except those held for trading exposures. As per the above regulation, the following are considered as non-performing Exposures (NPEs): (i) Material exposures that are over 90 days past due, (ii) The debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral,

regardless of the existence of any past-due amount or of the number of days past due, (iii) Exposures in respect of which a default is considered to have occurred in accordance with Article

178 of Regulation (EU) No 575/2013, (iv) Exposures of debtors against whom legal action has been taken by the Bank or exposures of

bankrupt debtors, (v) Exposures that are found impaired as per the applicable accounting framework, (vi) Forborne exposures that were NPE at forbearance or became NPE after forbearance and which are

re-forborne while under probation (the probation period for forborne exposures begins once the contract is considered as performing and lasts for two years minimum),

(vii) Forborne exposures reclassified from NPE status i.e. that were NPE at forbearance or became

NPE after forbearance and present more than 30 days past due while under probation (viii) Further to the above the all-embracing criteria apply as follows: (a) for debtors classified as retail

debtors as per the Regulation (EU) No 575/2013, when the Bank has on-balance sheet exposures to a debtor that are material and are past due by more than 90 days the gross carrying amount of which represents more than 20% of the gross carrying amount of all on-balance sheet exposures to that debtor, all on and off-balance sheet exposures to that debtor shall be considered as non-performing and (b) for debtors classified as non-retail debtors as per the Regulation (EU) No 575/2013, when the Bank has any on-balance sheet exposures to a debtor that are non-performing (if the exposure is non-performing due to over 90 days past due it must pass the materiality thresholds), all on and off-balance sheet exposures to that debtor shall be considered as NPE. Else, only exposures that are non-performing will be classified as such.

24

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) The below materiality thresholds apply only for the NPE criterion of arrears over 90 days past due. For exposures to debtors classified as Retail as per the Regulation (EU) No 575/2013: • For term loans: if the past due amount of each exposure is over €500 the exposure shall be classified as material. • For overdrafts/current accounts: if the past due amount or the excess of the exposure exceeds €500 or 10% of the limit approved by the Bank the exposure shall be classified as material. For exposures to debtors not classified as Retail as per the Regulation (EU) No 575/2013: • If the total excesses/past dues of debtors exceed €1.000 or exceed 10% of their total on balance sheet exposures then all the exposures of the debtor shall be classified as material. If as per the above the exposures are not classified as material, then they may be classified as performing NPEs even if they present arrears over 90 days past due. Exposures may be considered to have ceased being non-performing when all of the following conditions are met: (a) the situation of the debtor has improved to the extent that full repayment, according to the original or

when applicable the modified conditions, is likely to be made; (b) the debtor does not have any amount past-due by more than 90 days. When forbearance measures are extended to non-performing exposures or to exposures which had been non-performing at forbearance or became non-performing after forbearance, the exposures may be considered to have ceased being non-performing only when all the following conditions are met: (a) the extension of forbearance does not lead to the recognition of impairment or default; (b) one year has passed since the forbearance measures were extended; (c) there is not, following the forbearance measures, any past-due amount or concerns regarding the

full repayment of the exposure according to the post-forbearance conditions. (d) the debtor does not have any amount past-due by more than 90 days. As per EBA technical standards evidence of a concession towards a debtor which aim to address existing or anticipated difficulties on the part of the borrower to service debt in accordance with the current repayment schedule, includes: (a) the modification of the previous terms and conditions of a contract would not have been granted had

the debtor not been in financial difficulties;

(b) a difference in favour of the debtor between the modified and the previous terms of the contract;

(c) cases where a modified contract includes more favourable terms than other debtors with a similar risk profile could have obtained from the same institution.

Examples of exposures that should be classified as forborne as per the new EBA technical standards include: (a) Exposures that were non-performing at forbearance. (b) Exposures that were past due more than 30 days anytime within 3 months prior to forbearance. (c) Forbearance measures such as partial write-offs.

25

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) The forbearance classification shall be discontinued when all of the following conditions are met:

(a) the contract is considered as performing, including if it has been reclassified from the non-performing category after an analysis of the financial condition of the debtor showed it no longer met the conditions to be considered as non-performing,

(b) a minimum 2 year probation period has passed from the date the forborne exposure was considered

as performing,

(c) regular payments of more than an insignificant aggregate amount of principal or interest have been made during at least half of the probation period,

(d) none of the exposures to the debtor is more than 30 days past-due at the end of the probation

period. Based on the above categories, loans and advances to customers of the Group, are presented as follows:

Loans and advances to customers

30 June 2017 €’000

31 December 2016 €’000

Carrying amount 2.780.154 2.926.033

Impaired: Grade 3 (high risk) 2.314.310 2.473.278 Individual impairment losses (1.397.471) (1.346.526)

Carrying amount 916.839 1.126.752 Of which with forbearance measures 458.029 561.943

Past due but not impaired: Grade 1 (low risk) 45.078 64.527 Grade 2 (medium risk) 33.335 84.416 Grade 3 (high risk) 10.827 3.354

Carrying amount 89.240 152.297

Past due comprises: 0+ up to 30 days 42.842 62.117 30+ up to 60 days 12.031 62.543

60+ up to 90 days 27.055 23.921 90 days+ 7.312 3.716

Carrying amount 89.240 152.297 Of which with forbearance measures 37.396 62.161

Neither past due nor impaired: Grade 1 (low risk) 1.422.229 1.356.264 Grade 2 (medium risk) 360.173 301.527 Grade 3 (high risk) 17.112 16.751

Carrying amount 1.799.514 1.674.542 Of which with forbearance measures 310.886 275.416

Balances after individual impairment losses 2.805.593 2.953.591 Collective impairment losses (25.439) (27.558)

Total carrying amount 2.780.154 2.926.033

26

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued)

The movement of the net carrying amount of the Group’s impaired loans and advances to customers is as follows: 30 June

2017

31 December

2016

€’000 €’000

1 January 1.126.752 1.259.215

Transfer to non- impaired loans and advances during the period/year (124.621) (232.862)

Net movement of impaired loans and advances (120.251) (95.660)

881.880 930.693

Loans and advances classified as impaired during the period/year 34.959 196.059

30 June/31 December 916.839 1.126.752

The Group’s loans and advances with forbearance measures are analysed below: After individual impairment losses

30 June

2017

31 December

2016

30 June

2017

31 December

2016

€’000 €’000 €’000 €’000

Trade 125.982 107.604 77.934 73.555

Construction and Real Estate 576.882 674.880 354.871 431.447

Manufacturing 53.534 54.361 32.704 36.004

Tourism 51.732 67.175 41.782 55.428

Other sectors 203.332 209.086 149.443 154.191

Retail 202.315 197.762 149.583 148.895

1.213.777 1.310.868 806.317 899.520

The tangible collateral relating to loans and advances with forbearance measures amounted to €1.294 million as at 30 June 2017 (31 December 2016: €1.428 million).

Non-Performing Exposures (NPEs)

According to the CBC directive on Loan Impairment and Provisions Practices (2014 and 2015), the credit institutions are obliged to announce Table A and Table B as presented below. The non-performing exposures portfolio of the Group as at 30 June 2017 amounted to €2.354 million (31 December 2016: €2.504 million). The ratio of NPEs to gross loans was 56,0% (31 December 2016: 58,2%). NPE’s include contractual interest not recognized in the income statement. The NPEs provision (individual and collective impairment losses) coverage was 60,4% as at 30 June 2017 (31 December 2016: 54,9%).

27

Notes to the Interim condensed consolidated financial statements 9. Loans and advances to customers (continued) Analysis of loan portfolio according to the counterparty sector as at 30 June 2017 Table Α

Total loan portfolio Cumulative Impairment losses

of which non-performing exposures

of which exposures with forbearance measures



of which on non-performing exposures


€000 €000 €000 €000 €000 €000 €000 €000

Loans and advances* 4.203.064 2.354.353 1.213.777 885.023 1.422.910 1.397.471 416.235 407.460

General Governments 1.370 164 -- -- 12 -- -- --

Other financial corporations 65.645 32.600 33.947 22.173 18.859 18.353 11.689 11.442

Non-financial corporations 2.760.536 1.622.881 951.018 719.550 959.389 943.176 341.907 336.544

of which: Small and Medium-sized enterprises 2.572.050 1.572.929 908.482 701.589 931.589 917.712 336.207 331.327

of which: Commercial real estate 439.387 201.347 151.618 109.102 89.430 85.695 40.374 39.267

By sector

1. Construction 734.190 574.259

312.778

2. Wholesale and retail trade 692.175 418.544 280.140

3. Real estate activities 220.494 118.803 72.335

4. Accommodation and food service activities 293.080 130.358 64.578

5. Manufacturing 264.068 113.301 69.800

6. Other sectors 556.529 267.616 159.758

Households 1.375.513 698.708 228.812 143.300 444.650 435.942 62.639 59.474

of which: Residential mortgage loans 624.437 232.281 104.077 54.214 115.800 112.577 20.633 19.318

of which: Credit for consumption 250.707 146.519 17.845 11.991 118.603 116.467 3.898 3.521

* Non-including loans and advances to central banks and credit institutions.

28

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) Analysis of loan portfolio according to the counterparty sector as at 31 December 2016 Table Α

Total loan portfolio Cumulative Impairment losses







€000 €000 €000 €000 €000 €000 €000 €000

Loans and advances* 4.300.117 2.503.866 1.310.868 983.643 1.374.084 1.346.526 419.142 411.348

General Governments 1.447 -- -- -- 14 -- -- --

Other financial corporations 66.370 31.514 33.468 21.675 17.518 16.805 10.801 10.398

Non-financial corporations 2.869.983 1.772.477 1.052.328 812.283 940.856 922.225 349.262 343.975

of which: Small and Medium-sized enterprises 2.675.041 1.705.248 1.004.426 782.109 907.509 891.315 337.519 332.307

of which: Commercial real estate 498.278 217.860 175.392 112.015 91.040 86.080 43.644 42.012

By sector

1. Construction 801.406 653.664

313.257

2. Wholesale and retail trade 701.465 418.713 258.432

3. Real estate activities 265.598 164.855 89.458

4. Accommodation and food service activities 302.612 144.231 67.082

5. Manufacturing 250.768 113.213 64.655

6. Other sectors 548.134 277.801 147.972

Households 1.362.317 699.875 225.072 149.685 415.696 407.496 59.079 56.975

of which: Residential mortgage loans 619.380 236.427 97.458 53.951 102.947 100.496 17.035 16.222

of which: Credit for consumption 246.895 144.834 17.794 11.225 114.412 112.072 4.362 4.034

* Non-including loans and advances to central banks and credit institutions.

29

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) Analysis of loan portfolio* on the basis of loan origination date as at 30 June 2017 Table Β

Loan origination date**

Total loan portfolio Loans to non-financial corporations Loans to other financial corporations Loans to households

€000

Non-performing exposures

Cumulative Impairment

losses

Total exposures



losses

Total exposures



losses

Total exposures



losses

€000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000

Within 1 year 317.487 9.071 8.657 226.998 8.256 7.766 2.833 227 229 87.656 588 662

1 - 2 years 318.214 31.690 13.202 221.770 30.951 12.422 2.492 1 28 93.952 738 752

2 - 3 years 64.015 7.855 4.606 34.111 7.023 4.029 400 1 5 29.504 831 572

3 - 5 years 221.343 122.874 75.004 141.992 97.464 58.854 612 174 47 78.739 25.236 16.103

5 - 7 years 599.718 341.025 187.149 380.381 238.080 131.202 11.916 3.991 2.273 207.421 98.954 53.674

7 - 10 years 1.363.908 935.303 548.509 875.246 641.439 361.566 25.575 10.996 7.246 463.087 282.868 179.697

Over 10 years 1.317.009 906.371 585.771 880.038 599.668 383.550 21.817 17.210 9.031 415.154 289.493 193.190

Total 4.201.694 2.354.189 1.422.898 2.760.536 1.622.881 959.389 65.645 32.600 18.859 1.375.513 698.708 444.650

*Non-including loans and advances to general governments. **Loan origination date is defined as the contractual loan origination date for each account. For restructured loans the origination date was derived based on the origination date of the original loan that was restructured.

30

Notes to the Interim Condensed Consolidated Financial Statements 9. Loans and advances to customers (continued) Analysis of loan portfolio* on the basis of loan origination date as at 31 December 2016 Table Β

Loan origination date**

Total loan portfolio Loans to non-financial corporations Loans to other financial corporations Loans to households

€000



losses

Total exposures



losses

Total exposures



losses

Total exposures



losses

€000 €000 €000 €000 €000 €000 €000 €000 €000 €000 €000

Within 1 year 291.612 9.743 7.189 205.522 8.843 6.288 3.301 29 52 82.789 871 849

1 - 2 years 275.474 34.253 10.490 197.731 33.473 9.955 2.070 1 25 75.673 779 510

2 - 3 years 31.567 5.730 3.435 14.505 4.313 2.650 43 8 7 17.019 1.409 778

3 - 5 years 319.443 160.793 87.989 201.000 120.681 66.153 4.949 1.130 235 113.494 38.982 21.601

5 - 7 years 783.376 483.336 245.082 509.128 357.020 178.581 10.336 2.937 1.903 263.912 123.379 64.598

7 - 10 years 1.416.757 997.590 524.505 920.610 682.462 342.008 34.024 20.730 11.469 462.123 294.398 171.028

Over 10 years 1.180.441 812.421 495.380 821.487 565.685 335.221 11.647 6.679 3.827 347.307 240.057 156.332

Total 4.298.670 2.503.866 1.374.070 2.869.983 1.772.477 940.856 66.370 31.514 17.518 1.362.317 699.875 415.696

*Non-including loans and advances to general governments. **Loan origination date is defined as the contractual loan origination date for each account. For restructured loans the origination date was derived based on the origination date of the original loan that was restructured.

31

Notes to the Interim Condensed Consolidated Financial Statements 10. Debt Securities 30 June

2017 €'000

31 December 2016 €'000

Securities held to maturity

Listed 143.017 47.214

Securities classified as loans and receivables

Listed 193.388 299.360

Securities available for sale

Listed 732.250 802.558

1.068.655 1.149.132

Analysis of Debt securities by sector: 30 June

2017 €'000

31 December 2016 €'000

Concentration by sector:

Governments 748.302 781.665

Banks 27.199 61.642

Other sectors 293.154 305.825

1.068.655 1.149.132

As at 30 June 2017 the Group’s exposure in Cyprus Government Bonds amounted to €665.643 thousand (31 December 2016: €643.188 thousand). The category “Other sectors” mainly consists of debt securities of supranational organisations. The Group closely monitors developments in the international markets so that any measures needed to reduce credit risk are promptly taken. The monitoring of exposure in countries of high risk is centralised through systems that fully and on an ongoing basis cover all material exposures to these countries such as interbank placements, debt securities, other investments, etc. Also, maximum acceptable levels are specified according to the rankings of the countries and taking into account their credit ratings, in addition to political, economic and other factors. For the classification of a country as “High Risk” country, the Non-Investment Grade status of countries which as per the Regulation (EU) No 575/2013 (CRR) is the worst, out of the best two ratings from Moody’s, Fitch and S&P as well as the Euromoney Score of countries are primarily considered. Some of the debt securities listed in the table below, based on the three level hierarchy depending on the significance of the inflows used to determine fair value, are classified in Level 2 and 3. The table below shows the Group's exposure to investments in debt securities in countries with high credit risk, at the reporting date:

Nominal value Book value Market value €’000 €’000 €’000 Cyprus:

Government Bonds 621.191 665.643 685.799

32

Notes to the Interim Condensed Consolidated Financial Statements 11. Reclassification of debt securities On the 1st of January 2009, the Group proceeded with a review of its intention for the holding of debt securities and consequently of its policy for classifying them under the various categories. As a result of this review, a number of debt securities, which were included in the held for trading and available for sale categories, were reclassified to the held to maturity and loans and receivables categories. In accordance with the provisions of the amended IAS 39, the Group had reclassified certain available for sale debt securities to loans and receivables, in view of the fact that there was no active market for these debt securities and the Group did not have the intention to sell these securities in the foreseeable future. All reclassified held for trading debt securities had matured by 2011 and all reclassified available for sale debt securities had matured by June 2017.

In addition, on the 1st of January 2009, the Group reclassified certain available for sale debt securities, that it intended to hold to maturity, to the held to maturity category. The carrying amount of these debt securities transferred on the 1st of January 2009 amounted to €1.019 million. On 31st December 2016 the carrying value of these remaining bonds amounted to nil since all bonds matured. As a result of the above decision, for the period ended 30 June 2017, an amount of €74 thousand (31 December 2016: €733 thousand), being amortisation of revaluation of reclassified debt securities available for sale, was transferred from the investment revaluation reserve to the income statement. For the years 2010 to 2016 as well as for the six-month period ended 30 June 2017, there has been no other reclassification of debt securities in other categories. 12. Property, plant and equipment and intangible assets

13. Deferred Tax Asset/ Deferred Tax Liability

Deferred tax asset arises from: 30 June

2017 €’000

31 December 2016 €’000

Property revaluation differences and differences between depreciation and capital allowances

--

1

Tax losses 11.709 8.464

11.709 8.465

Property, plant and equipment

Intangible assets

€'000 €'000

Net book value 1 January 2017 99.648 26.526

Additions less disposals 2.643 5.312

Depreciation/amortisation (2.482) (1.168)

Net book value 30 June 2017 99.809 30.670

33

Notes to the Interim Condensed Consolidated Financial Statements 13. Deferred Tax Asset /Deferred Tax Liability (continued) Movement of Deferred tax asset: 30 June 2017 Balance

1 January Effect on

income statement

Balance 30 June

€'000 €'000 €'000 Property revaluation differences and differences between depreciation and capital allowances

1

(1)

--

Tax losses 8.464 3.245 11.709

8.465 3.244 11.709

31 December 2016

Balance 1 January

Effect on income

statement

Balance 31 December

€'000 €'000 €'000 Property revaluation differences and differences between depreciation and capital allowances

1

--

1 Tax losses 58.093 (49.629) 8.464

58.094 (49.629) 8.465

Deferred tax liability arose as follows:

30 June 2017 €’000

31 December 2016 €’000

Property revaluation differences and differences between depreciation and capital allowances 2.027 1.975

Other temporary differences 5 5

2.032

1.980

Movement of Deferred tax liability: 30 June 2017

Balance 1 January

Effect on revaluation

reserve

Effect on income

statement

Balance 30 June

€'000 €'000 €'000 €'000 Property revaluation differences and differences between depreciation and capital allowances

1.975

20

32

2.027 Other temporary differences

5

--

--

5

1.980 20 32 2.032

34

Notes to the Interim Condensed Consolidated Financial Statements 13. Deferred Tax Asset /Deferred Tax Liability (continued) 31 December 2016

Balance 1 January

Effect on revaluation

reserve

Effect on income

statement

Balance 31 December

€'000 €'000 €'000 €'000 Property revaluation differences and differences between depreciation and capital allowances

1.467

12

496

1.975 Other temporary differences

5

--

--

5

1.472 12 496 1.980

14. Other assets As at 30 June 2017, the other assets amounted to €209.312 thousand (31 December 2016: €179.319 thousand) of which Stock of properties held for sale amounted to €140.296 thousand (31 December 2016: €117.695 thousand). The Bank as part of its non-performing exposures management is entering into a number of debt-to-asset swap transactions. Assets acquired in satisfaction of debt are acquired either directly or indirectly through wholly owned Special Purpose Vehicles (SPVs). For liquidation optimisation the SPVs are owned either directly by the Bank or indirectly through a wholly owned holding company (D4A2 Ltd). For properties held through SPVs and for which the titles have not yet been issued, the ownership is ensured via filing of the Sales/Purchases agreement with the Land Registry. The stock of properties include residential, offices and other commercial properties, industrial buildings and land (fields and plots). During 2015 the Bank set up and has a 100% shareholding in Anolia Holdings Ltd whose main activity is the ownership and management of immovable property and is classified under assets held for sale. The carrying amount of the investment as at 31 December 2016 amounted to €40.625 thousand. During the first quarter of 2017, an agreement was signed for its sale for a consideration of €42.683 thousand resulting to a gain of €2.058 thousand included in “Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income”. As at 30 June 2017, the Group’s Stock of properties held for sale amounted to €140.296 thousand (31 December 2016: €117.695 thousand), of which €138.885 thousand (31 December 2016: €116.270 thousand) relate to assets acquired in satisfaction of debt and the remaining €1.411 thousand (31 December 2016: €1.425 thousand) relate to assets not in use.

35

Notes to the Interim Condensed Consolidated Financial Statements 14. Other assets (continued) The Group’s movement of assets from customers’ debt settlement held for sale is presented as follows:


Insurance Services

Total

€'000

€'000

€'000

1 January 2017 115.477 793 116.270

Additions 63.454 -- 63.454

Disposals (40.821) -- (40.821)

Impairment losses -- (18) (18)

30 June 2017 138.110 775 138.885

Banking & Financial

services Insurance Services

Total

€'000

€'000

€'000

1 January 2016 69.655 828 70.483

Additions 51.510 -- 51.510

Disposals (4.698) -- (4.698)

Impairment losses (990) (35) (1.025)

31 December 2016 115.477 793 116.270

During 2016, the stock of property held for sale and assets held for sale were revalued by independent professional valuers based on open market value for their existing use. The fair value of these assets amounted to €141.350 thousand. 15. Loan capital 30 June

2017 €'000

31 December 2016 €'000

Tier 1 Capital

Convertible Capital Securities 1-CCS 1 1.597 1.597 Convertible Capital Securities 2-CCS 2 128.070 128.070 129.667 129.667

Tier 2 Capital

Non-Convertible Bonds 2018 10.000 10.000

10.000 10.000

139.667 139.667

Full details/terms of issue of the Bonds and Securities of the Bank are included in the Prospectus and the Supplementary Prospectuses of each issue.

Convertible Capital Securities 1/ Convertible Capital Securities 2 (CCS 1/CCS 2) Pursuant to the terms of the Prospectus dated 30 September 2013, CCS1/CCS2 holders may exercise the right to convert the CCS1/CCS2 into ordinary shares, during the periods between 15-31 January and 15-31 July of each year (“the Conversion Period”) with the first Conversion Period commencing on 15 January 2016 and the last Conversion Period commencing on 15 July 2023. If a CCS1/CCS2 holder exercises his

36

Notes to the Interim Condensed Consolidated Financial Statements

15. Loan capital (continued) Right to convert, any interest accrued ceases to be calculated and becomes due until the end of the conversion period during which the holder has exercised voluntary conversion, according to the provisions of Paragraph 10.B.(d) of Part IV/B/III and 11.B.(d) of Part IV/C/III of the prospectus. The first Conversion Period for CCS1/CCS2 commenced on 15 January 2016 and ended on 29 January 2016, the second Conversion Period commenced on 15 July 2016 and ended on 29 July 2016, the third Conversion Period commenced on 16 January 2017 and ended on 31 January 2017 and the forth Conversion Period commenced on 17 July 2017 and ended on 31 July 2017. During the four conversion periods the Bank did not receive a Voluntary Conversion Application from any CCS1 /CCS2 holder. 16. Share capital

30 June 2017

€’000

Number of shares

(thousand)

31 December 2016 €’000

Number of shares

(thousand)

Authorised

1.032 million shares €0,50 each 516.000 1.032.000 516.000 1.032.000

30 June 2017 €'000

No. of shares

(thousand)

31 December 2016 €'000

No. of shares

(thousand) Issued

Fully paid shares

1 January 99.237 198.475 99.217 198.435

Issue of shares to CEO as part of his

variable remuneration package

--

--

20

40

Total issued share capital 99.237 198.475 99.237 198.475

During the six-month period to 30 June 2017 there was no movement to the Bank’s issued or authorised share capital. At 30 June 2017, 198.474.712 fully paid shares were in issue, with a nominal value of €0,50 each (31 December 2016: 198.474.712 shares with a nominal value €0,50 each). 17. Revaluation reserves 30 June

2017 €'000

31 December 2016 €'000

Property revaluation reserve 1 January 29.400 29.740

Deferred taxation on property revaluation (20) (12) Transfer to revenue reserve due to excess depreciation (24) (317) Transfer to revenue reserve due to disposal of immovable property (429) (11)

28.927 29.400 Revaluation reserve of available for sale securities 1 January 8.109 20.753 Revaluation of equity securities available for sale 336 (1.471) Revaluation of debt securities available for sale 18.397 1.941 Amortisation of revaluation of reclassified debt securities available for sale (74) (733) Transfer to the income statement on disposal of investments in equity available for sale -- (12.381)

26.768 8.109

Total revaluation reserves 30 June/31 December 55.695 37.509

37

Notes to the Interim Condensed Consolidated Financial Statements 18. Contingent liabilities and commitments Capital Commitments At 30 June 2017 the Group’s commitments for capital expenditure, not recognised in the statement of financial position, amounted to €7.767 thousand (31 December 2016: €6.349 thousand). Contingent liabilities for pending litigations or complaints and/or claims The Group is engaged in various legal proceedings and regulatory matters arising out of its normal business operations, where an obligation is created for which an outflow of resources embodying economic benefits is possible. The existence of these obligations will be confirmed only by the occurrence, or non-occurrence, of one or more uncertain future events not wholly within the control of the Group. Hence the effect of the outcome of these matters cannot be predicted with certainty but may impact the Group’s financial results. The Group is of the opinion that there are adequate defences in place for a successful outcome, in the course of the relevant proceedings. It is not practicable to provide an aggregate estimate of potential liability for such legal proceedings to be disclosed as a class of contingent liabilities. On 22 May 2017 the Commission for the Protection of Competition (CPC) announced its final decision in respect of the report submitted on 4 January 2010 by FBME Card Services Limited against Hellenic Bank and other banks as well as JCC Payment Systems Limited. In its decision CPC decided, among other, to impose a fine on Hellenic Bank of €1.569.989 for contravening section 6(1)(a) of the Protection of Competition Law 2014 and the corresponding article 102 of the Treaty on the Functioning of the European Union. Hellenic Bank has filed a recourse before the Administrative Court in Cyprus for the annulment of the aforementioned CPC decision. Any resulting liability arising from the imposed fine, is not expected to have a material impact on the financial position of the Group as the Bank has sufficiently provided for it. 19. Fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. The Group measures the fair value of an instrument using the quoted price in an active market, when available, for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the main factors that market participants would take into account in pricing a transaction. Fair value of financial instruments The table below presents the analysis of the Group’s financial instruments measured at fair value on the basis of the three-level hierarchy by reference to the source of data used to derive the fair values. The levels of hierarchy of fair value are as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Data other than quoted prices included within level 1 that is observable for the asset or liability, either directly or indirectly.

• Level 3: Import data for the asset or liability that is not based on observable market data (non- observable import data).

38

Notes to the Interim Condensed Consolidated Financial Statements 19. Fair value (continued)

30 June 2017 Level 1 Level 2 Level 3 Total

€'000 €'000 €'000 €'000

Financial assets Derivatives: Foreign currency forwards -- 22 -- 22

Treasury forwards -- 4 -- 4 Interest rate swaps -- 447 -- 447

Currency swaps -- 111 -- 111

-- 584 -- 584

Other financial assets at fair value through profit or loss

Debt securities:

Banks -- -- -- --

Other issuers -- -- -- --

Equity securities 426 -- -- 426

426 -- -- 426

Investments available for sale

Debt securities:

Government 411.896 -- -- 411.896

Banks 27.199 -- -- 27.199

Other issuers 277.567 15.588 -- 293.155

Equity securities 1.120 -- 7.369 8.489

Collective investments units 7.446 -- -- 7.446

725.228 15.588 7.369 748.185

Total 725.654 16.172 7.369 749.195

30 June 2017 Level 1 Level 2 Level 3 Total

€'000 €'000 €'000 €'000

Financial liabilities Derivatives: Foreign currency forwards -- 1.178 -- 1.178

Treasury forwards -- -- -- --

Interest rate swaps -- 1.331 -- 1.331

Currency swaps -- 4.679 -- 4.679

Total -- 7.188 -- 7.188

39

Notes to the Interim Condensed Consolidated Financial Statements 19. Fair value (continued)

31 December 2016 Level 1 Level 2 Level 3 Total

€'000 €'000 €'000 €'000

Financial assets Derivatives: Foreign currency forwards -- 1.145 -- 1.145

Options -- 94 -- 94 Interest rate swaps -- 1.448 -- 1.448


-- 10.926 -- 10.926

Other financial assets at fair value through profit or loss

Debt securities:

Banks -- -- -- --

Other issuers -- -- -- --

Equity securities 293 -- -- 293

293 -- -- 293

Investments available for sale

Debt securities:

Government 432.663 2.428 -- 435.091

Banks 61.642 -- -- 61.642

Other issuers 285.981 19.844 -- 305.825

Equity securities 982 -- 7.228 8.210

Collective investments units 7.505 -- -- 7.505

788.773 22.272 7.228 818.273

Total 789.066 33.198 7.228 829.492

31 December 2016 Level 1 Level 2 Level 3 Total

€'000 €'000 €'000 €'000

Financial liabilities Derivatives: Foreign currency forwards -- 1 -- 1

Options -- 94 -- 94

Interest rate swaps -- 2.522 -- 2.522


Total -- 4.227 -- 4.227

The tables below present the movement of financial instruments categorized at Level 3 hierarchy:

Investments

available for sale

Equity securities

Total €'000 €'000 1 January 2017 7.228 7.228

Gains recognised in consolidated statement of comprehensive income in the category “Surplus on revaluation of available for sale equity and debt securities”

141 141

30 June 2017 7.369 7.369

40

Notes to the Interim Condensed Consolidated Financial Statements 19. Fair value (continued) Investments available for sale

Debt securities

Equity

securities

Shares held for

sale

Total €'000 €'000 €'000 €'000 1 January 2016 9.887 6.525 12.381 28.793 Gains recognised in consolidated income statement in the category “Net gains on disposal and revaluation of foreign currencies and financial instruments”

113

--

-- 113 Additions -- 1.906 -- 1.906 Transfer out -- (32) -- (32) Disposals (10.000) -- (12.381) (22.381) Losses recognised in consolidated statement of comprehensive income in the category “Surplus on revaluation of available for sale equity and debt securities”

--

(1.171)

-- (1.171)

31 December 2016 -- 7.228 -- 7.228

For the valuation at fair value of the investments in equity securities which are classified as Level 3, a valuation method based on the company's equity at which the investment in shares is held as well as estimates of the Management of the Group have been used. Investments in debt securities, classified in Level 3, were valued using unobservable data that reflect however the assumptions that market participants would make to assess an asset or a liability, based on the best available information under current conditions. On 30 June 2017 the fair value of investments in debt securities classified in the category “Assets held to maturity” and which are not measured at fair value amounted to €90.476 thousand (31 December 2016: €49.377 thousand) and in the three-level hierarchy would be classified as Level 1. Also the fair value of investments in debt securities classified in the category “Loans and receivables” and which are not measured at fair value, as at 30 June 2017 amounted to €250.693 thousand (31 December 2016: €302.096 thousand) and in the three-level hierarchy would be classified as Level 2. The fair value of loans and advances to customers is based on the present value of expected future cash flows. The level of subjectivity and degree of management judgment required is significant in these discounted cash flow models given that management is required to exercise judgment in the selection and application of parameters and assumptions where some or all of the parameter inputs are less observable. Future cash flows have been based on the future expected loss rate per loan category, taking into account expectations in the credit quality of the borrowers. The discount rate includes components that capture: the Group’s funding cost, cost of capital and an adjustment for the future cost of risk. The fair value of loans and advances to customers not measured at fair value on 30 June 2017 amounted to €2.648 million (31 December 2016: €2.819 million) for the Group and would have been classified at Level 3. 20. Related party transactions Members of the Board of Directors and connected persons Connected persons include the spouse, the children, the parents and the companies in which Directors hold, directly or indirectly, at least 20% of the voting rights at a general meeting. 30 June

2017 €'000

31 December 2016 €'000

Loans and advances 23

28

Tangible securities 7

--

Deposits 1.662

1.569

41

Notes to the Interim Condensed Consolidated Financial Statements 20. Related party transactions (continued) Additionally, at 30 June 2017, there were contingent liabilities and commitments in respect of Members of the Board of Directors and their connected persons in the form of documentary credits, guarantees and unused limits amounting to €74 thousand which did not exceed 1% of the Bank’s net assets (31 December 2016: €56 thousand). For the period ended 30 June 2017 there was no interest income in relation to Members of the Board of Directors and their connected persons (30 June 2016: €nil), while interest expense in respect of Members of the Board of Directors and their connected persons amounted to €8 thousand (30 June 2016: €5 thousand). Emoluments and fees of Members of the Board of Directors

30 June 2017 €'000

30 June 2016 €'000

Emoluments and fees of Members of the Board of Directors:

Emoluments and benefits in executive capacity 193 369

Employer’s contributions for social insurance, etc 8 1

Retirement benefits 7 7

Total emoluments for Executive Directors 208 377

Fees 498 487

Employer’s contributions – Non Executive Directors -- 23

Other transactions with Members of the Board of Directors and related parties The sales of insurance policies for the period ended 30 June 2017 by the Group’s subsidiary, Pancyprian Insurance Ltd, to Members of the Board and their connected persons as defined above, amounted to €5 thousand (30 June 2016: €9 thousand), while sales of insurance policies by the Group’s subsidiary, Hellenic Alico Life Insurance Company amounted to €428 (30 June 2016: €8). For the period ended 30 June 2017 non-interest income which relates to Members of the Board of Directors and their connected persons was nil (30 June 2016: €1 thousand). Key Management personnel who are not Directors and their connected persons Key Management personnel are those persons who have the authority and the responsibility for the planning, management and control of the Banks’ operations, directly or indirectly. The Group, according to the provisions of IAS 24 considers as Key Management personnel the General Managers of the Bank who were not Directors, the members of the Asset and Liability Committee (ALCO) as well as management personnel who refer directly to the Chief Executive Officer. Connected persons include spouses, minor children and companies in which the Key Management personnel who were not Directors hold, directly or indirectly, at least 20% of the voting rights at a general meeting. 30 June

2017 €'000

31 December 2016 €'000

Loans and advances 703 716

Tangible securities 363 227

Deposits 4.485 4.134

42

Notes to the Interim Condensed Consolidated Financial Statements 20. Related party transactions (continued) Emoluments of Key Management personnel of the Group The emoluments of Key Management personnel who were not Directors were:

30 June 2017 €'000

30 June 2016 €'000

Emoluments of Key Management personnel who were not Directors:

Salaries and other short term benefits 1.168 1.191

Employer’s contributions for social insurance etc 67 104

Retirement benefits 77 71

Amounts paid on termination -- 238

1.312 1.604

In August 2016 the Bank changed its organisational structure. The number of Key Management personnel decreased to 16 (30 June 2016: number of Key Management personnel 18). During the first quarter of 2016, the contract of employment between one Key Management personnel and the Bank was terminated by mutual consent. The parties agreed to a consideration for the termination of the contract of employment, in cash and in kind, amounting in total approximately €238 thousand. The Bank also paid to the Key Management personnel the total amount of his accrued rights. Furthermore the Bank signed a termination agreement with another Key Management Personnel and paid to him in the fourth quarter of 2016 the ex-gratia amount of €202 thousand. The termination took place during the first quarter of 2017 and additional amount of €23 thousand benefits in kind were given. In addition, on 30 June 2017, there were contingent liabilities and commitments to Key Management personnel who were not Directors and their connected persons amounting to €326 thousand (31 December 2016: €296 thousand). Interest income in relation to Key Management personnel and their connected persons for the period ended 30 June 2017 amounted to €8 thousand (30 June 2016: €6 thousand), while interest expense in relation to Key Management personnel and their connected persons amounted to €24 thousand (30 June 2016: €22 thousand). The sales of insurance policies for the period ended 30 June 2017 by the Group’s subsidiary, Pancyprian Insurance Ltd, to Key Management personnel and their connected persons, as defined above, amounted to €12 thousand (30 June 2016: €20 thousand) while the sales of insurance policies by the Group’s subsidiary, Hellenic Alico Life Insurance Company amounted to €21 thousand (30 June 2016: €12 thousand). Shareholders with significant influence and their connected persons Pursuant to the provisions of IAS 24, related parties are considered, among others, the Shareholders who have significant influence to the Bank or/and hold directly or indirectly more than twenty percent (20%) of the nominal value of the issued capital of the Bank. Connected persons include the entities controlled by Shareholders with significant influence as they are defined above. 30 June

2017 €'000

31 December 2016 €'000

Loans and advances 4 1

Tangible securities 298 198

Deposits 34.317 21.505

43

Notes to the Interim Condensed Consolidated Financial Statements 20. Related party transactions (continued) On 30 June 2017, there were contingent liabilities and commitments in relation to Shareholders with significant influence and connected persons in the form of documentary credits, guarantees and unused limits amounting to €610 thousand (31 December 2016: €514 thousand). Interest income in relation to Shareholders and connected persons for the period ended 30 June 2017 amounted to nil (30 June 2016: €nil) while the corresponding interest expense was €1 thousand (30 June 2016: €1 thousand). Other transactions with Shareholders with significant influence and their connected persons During the period ended 30 June 2017, there were no purchases of goods and services by Shareholders with significant influence and their connected persons as defined above (30 June 2016: €nil). In addition, the sales of insurance policies by the Group's subsidiary, Pancyprian Insurance Ltd, to Shareholders with significant influence and their connected persons as defined above, amounted to €46 thousand (30 June 2016: €126 thousand). On 30 June 2017, Shareholders with significant influence and their connected persons had in their possession Convertible Capital Securities 2 (CCS2) amounting to €15,7 million (31 December 2016: €15,7 million). For the period ended 30 June 2017 non-interest income amounting to €81 thousand (30 June 2016: €39 thousand) was received which relates to Shareholders with significant influence and their connected persons. All transactions with Members of the Board of Directors, Key Management personnel, Shareholders with significant influence and their connected persons are at an arm’s length basis. Regarding the Key Management personnel, facilities have been granted based on current terms as those applicable to the rest of the Group’s personnel.

21. Economic Environment Economic Environment and Group operations in Cyprus The economic recovery has been broad based and continues to strengthen for a ninth consecutive quarter. According to the Flash Estimate compiled by the Statistical Service, based on seasonally and working day adjusted data, the GDP growth rate in real terms during the first half of 2017 is positive and estimated at +3,6% over the corresponding period of 2016.

The better than expected outcome in the economy, together with the improved domestic financial conditions, marked by deposit growth and deleveraging, have created and maintained an environment of improved confidence. This is reflected in the upgrades of the country’s and the largest domestic banks’ credit rating by international rating agencies. In September 2017, Standard and Poor’s, affirmed Cyprus’ long-term rating to BB+ , which stands one notch below investment grade, while it raised the country’s outlook to positive from stable. Also, on 28 July 2017, Moody’s upgraded the Cyprus sovereign to Ba3 from B1. Taking advantage of the stable market backdrop and the recent rating upgrades, in June 2017, accessed international capital markets for the second time after the completion of the economic adjustment programme, with an issue of a seven year bond of €850 million at a yield of 2,8%. The course of the steady recovery path is reflected in the labor market, which tends to follow the recovery with a time lag. In June 2017, the unemployment rate stood at 10,8%. For the first half of 2017 the Harmonized Consumer Price Index recorded an annual increase of 1,2%. The expansion of the economy was mainly driven by rising private consumption and investment. From a sectoral point of view, growth was supported by resilient export performance in the services sectors of tourism and professional business. Specifically, for the period January – May 2017 revenue from tourism is estimated at €649,2 million compared to €530,2 million in the corresponding period of 2016, recording an increase of 22,4%. For the first half of 2017 arrivals of tourists totalled 1.463.206 compared to 1.255.240 in the corresponding period of 2016, recording an increase of 16,6%. The housing market continued its adjustment during the first quarter of 2017 (latest available data), bringing the cumulative fall in prices since mid-2008 to 32% (Central Bank of Cyprus’s Property Price Index). In Q1 2017,

44

Notes to the Interim Condensed Consolidated Financial Statements 21. Economic Environment (continued) the CBC index recorded a positive growth for the first time in seven years (0,2%). During the first half of 2017, property sales recorded a new increase according to Land Registry data. Specifically, the sales deeds submitted during the relevant period increased to 3.610 versus 3.012 in the same period of the previous year, recording an annual increase of 20%. Cyprus' macroeconomic outlook is positive and is accompanied by robust activity and employment growth during the first half of 2017. Despite the important steps taken towards restoring the economic climate, some degree of uncertainty remains, as the country still has certain issues to resolve, such as the high volume of Non-Performing Exposures (NPEs), high unemployment and delays in the advancement of structural reforms. Also, the high ratio of public debt to GDP renders Cyprus vulnerable to negative shocks. From an exogenous perspective, the country’s economy may be negatively influenced due to weaker than expected growth in the Euro area and a slowdown in output growth in the UK and further depreciation of the pound against the Euro, as a result of increased uncertainty following United Kingdom’s decision to leave the European Union. Also, possible deterioration of the Russian economic outlook and the increased geopolitical tensions in the Middle East and Eastern Mediterranean, could trigger adverse spillovers to economic confidence, tourism and consequently to the aggregate economic activity. On the other hand, geopolitical tensions in neighbouring counties render Cyprus as a safer tourist destination and could therefore counterbalance, to a significant extent, the potential reduction in tourist traffic from UK. Additionally, developments over a potential reunification of Cyprus along with the exploitation of Cyprus’ natural resources are being closely monitored in order to assess the potential prospects that are being developed. In spite of these challenges, Cyprus' macroeconomic outlook is positive. Official forecasts by the Ministry of Finance of the Republic of Cyprus anticipate growth of 2,9% in 2017. The pick-up in domestic demand is expected to be reflected into improved labor market conditions, with unemployment starting to ease gradually. Inflation is expected to turn positive, but remain relatively low, weighed down by recent declines in oil prices.

Consequences of the recent developments The Cyprus banking sector has gone through a reformation phase and is now in a strengthened capital and liquidity position. Its size has been reduced to a moderate 3,7 times the GDP or about the EU average. Foreign exposures have been eliminated and domestic operations form the main focus. While decisive steps were taken and swift progress has been achieved throughout the banking sector, the high share of NPEs continues to impact banks’ balance sheets. The Bank has managed to navigate successfully through the banking crisis. Ιt has retained throughout the crisis its reputation for stability and confidence and is now focusing on strengthening and improving its market position within the Group's strategy of reorganizing and reforming its business model. The main pillars of the strategy is the reduction of NPEs, the expansion of new lending, thus increasing the Bank’s market share, and the increase of its revenues through other banking activities. The Bank, advancing towards decisive actions to tackle its loan portfolio quality, Hellenic Bank Public Company Ltd has sold its NPEs and real estate management business, to a newly established entity APS Debt Servicing Cyprus Ltd (“APS Cyprus”) which is a member of the APS Holding a.s. (“APS Holding”) group of companies. Through the creation of the first debt servicing platform in the Cypriot market, the Bank will be able to effectively tackle its NPEs in an accelerated way and with higher recoveries, leveraging on the knowhow, proven expertise and technical experience of APS Holding. Furthermore, it will allow the Bank to better allocate its resources on managing and growing the performing loan portfolio by using its excess liquidity to the benefit of the market, as well as on continuing its digital transformation journey, the optimisation of corporate governance and the adaptation to the expanding compliance framework. The Bank maintains sufficient liquidity which allows the exploitation of opportunities, maintaining its focus on organic growth. The focus of new loans will be to companies that increase the competitiveness and productivity of the country, such as in the sectors of retail and commercial activities, manufacturing, tourism and on shipping by targeting specific customer profiles. At the same time, loans to the retail sector will be geared toward mortgages, small loans to new customers and supporting current clients who are deemed viable.

45

Notes to the Interim Condensed Consolidated Financial Statements 22. Capital Base and Adequacy

The Capital Adequacy Ratios of the Group and the Bank under Pillar I, which are above the minimum regulatory requirements, were as follows:

Capital Adequacy Ratios Group (transitional basis)

Group (fully

loaded basis)

Bank

(transitional

basis)

30.06.2017 31.12.2016 ∆ 30.06.2017 30.06.2017

Capital Adequacy Ratio (%) 17,55% 17,24% +31 bps 17,40% 17,51%

Tier 1 Ratio (%) 17,40% 17,01% +39 bps 17,34% 17,36%

Common Equity Tier 1 (CET 1) Ratio (%) 13,88% 13,83% +5 bps 13,63% 13,85%

Common Equity Tier 1 capital (€million) 486 518 -6% 477 485

Risk Weighted Assets (RWAs) (€million) 3.497 3.744 -7% 3.497 3.503

The increase of 5 basis points in CET 1 ratio (transitional basis) compared to 31 December 2016, was mainly the result of the below:

i) overall decrease in CET1 capital, mainly due to: - current period losses (effect of 68 basis points decrease) primarily due to increased provisions and

impairment losses to cover credit risk - net increase in other comprehensive income mainly due to positive revaluation of bonds as prudentially

adjusted by the Bank for regulatory capital purposes (effect of 23 basis points increase) - the increase in deferred tax assets arising from tax losses and intangible assets as well as gradual

elimination of transitional provisions (effect of 41 basis points decrease),

ii) οverall decrease in RWAs, mainly due to the decrease in net funded defaulted exposures (effect of 91 basis points increase).

As at 30 June 2017 the Leverage Ratio1 for the Group was 8,83% (Bank: 8,82%) compared to 8,75% (Bank: 8,74%) as at 31 December 2016. The Leverage Ratio on a fully loaded basis for the Group was formed at 8,80% (Bank: 8,79%) compared to 8,71% (Bank: 8,70%) as at 31 December 2016. Supervisory Review and Evaluation Process 2015 As from 20 November 2015 the Bank is required to maintain, on a consolidated basis, a CET 1 capital ratio of 11,75%, as such ratio is defined in Regulation (EU) No 575/2013 of the European Parliament and of the Council, including a fully loaded capital conservation buffer (CCB) of 2,5%. The ECB decision was based on the SREP conducted on the information available with reference date 31 December 2014. In February 2017, the House of Representatives of Cyprus passed into law, an amendment in the Business of Credit Institutions Law which introduces a transitional period for the application of CCB requirement with retrospective application from 1st January 2016 of 0,625% with full implementation from 1st January 2019 of 2,5%. If the provisions of the above law amendment are applied the minimum CET 1 ratio is reduced to 9,875% for 31 December 2016. Supervisory Review and Evaluation Process 2016 In December 2016, following ECB’s final decision in establishing prudential requirements, which was based on the SREP conducted pursuant to Article 4(1)(f) of Regulation (EU) No 1024/2013 with reference date 31 December 2015, and also having regard to other relevant information received thereafter, the Bank is required to maintain for 2017, on a consolidated basis, a phase-in Capital Adequacy Ratio of 12,75%, which includes:

1 According to the Regulation (EU) No 2015/62 of the European Parliament and Council dated 10th of October 2014.

46

Notes to the Interim Condensed Consolidated Financial Statements 22. Capital Base and Adequacy (continued)

• the minimum Pillar I own funds requirements of 8% in accordance with Article 92(1) of Regulation (EU) No 575/2013 (of which up to 1,5% can be met with Additional Tier 1 Capital and up to 2% with Tier 2 Capital),

• an own funds Pillar II requirement of 3,5% required to be held in excess of the minimum own funds requirement (to be made up entirely of CET 1 Capital),

• and a phased in combined buffer requirement which for 2017 includes the capital conservation buffer (CCB) of 1,25% following the above law amendment, which have to be made up with CET 1 capital.

Additionally, applicable for Hellenic Bank, the combined buffer requirement includes:

• an O-SII buffer of 1% fully loaded and is phased in over a period of four years with application starting from 1st of January 2019,

• a Counter-Cyclical Capital Buffer (CCyB) for which the CBC has set the level at 0% for 2016 and 2017 (the Institution specific CCyB for 2016 was 0%),

• Systemic Risk Buffer which has not been set to date.

Taking into account the phase-in legislation for CCB, the Group’s minimum CET1 and Tier 1 ratios effective as from 1st January 2017 are set at 9,25% and 10,75% respectively. In addition to the above, the ECB has set on a consolidated basis, a Pillar II capital guidance to be made up entirely of CET 1 capital. The new minimum capital requirements were effective from 1st January 2017.

23. Sale of Non-Performing Loan and Real Estate Management Business by the Bank to APS Debt Servicing Cyprus Ltd

On the 3rd of July 2017, the Bank announced that it had sold its Non-Performing Loan (NPL) and real estate (REO portfolio) management business, to a newly established entity, APS Debt Servicing Cyprus Ltd (“APS Cyprus”) which is a member of the APS Holding a.s. (“APS Holding”) group of companies.The new entity is owned 51% by APS Holding and 49% by the Bank. The transfer of business was completed on the 30th of June 2017, while APS Cyprus commenced operations on the 3rd of July 2017.

APS Cyprus acquired the operations of the Bank’s internal Arrears Management Division (“AMD”), including the necessary resources to independently carry out the servicing of NPLs and REO portfolio. Simultaneously, the Bank has executed a 10-year service level agreement with APS Cyprus for the management of the Bank’s NPLs and REO Portfolio. It is noted that the Bank retains the ownership of the said NPLs and REO Portfolio. The contract was priced at arms’ length following a two stage competitive auction process.

APS Holding is a leading company in the management and recovery of loan portfolios and real estate within Central and South-Eastern Europe. Founded in 2004, APS Holding is headquartered in Prague, Czech Republic. Through its more than 650 experts, it provides services in 11 European countries: Bulgaria, Croatia, Cyprus, the Czech Republic, Hungary, Montenegro, Poland, Romania, Greece, Serbia, and Slovakia. APS Holding manages assets with a total nominal value of more than €5,1 billion (€7,5 billion including the current transaction). Since 2013, APS Holding has been an official partner of the International Finance Corporation

(IFC), a member of the World Bank.

APS Cyprus has assumed all operating expenses associated with the management of the Bank’s NPL and REO Portfolio including but not limited to the costs of payroll, IT licenses, processes, products, services and other operations related overheads. 129 employees from the Bank’s AMD moved to APS Cyprus while additional resources, expertise and knowhow will be brought in as needed to further enhance the capabilities and capacity of the operation.

The transaction is consistent with the Group’s strategy of tackling the asset quality problems of its portfolio and to develop its activities within a prudent risk management framework. Furthermore, it is in line with the European Central Bank, International Monetary Fund and European Bank for Reconstruction and Development guidelines on the management of NPLs. Through the creation of the first debt servicing platform in the Cypriot market, the Bank will be able to effectively tackle its NPLs in an accelerated way and with higher recoveries, leveraging on the knowhow, proven expertise and technical experience of APS Holding. The Bank will also be in a stronger position to focus its resources on managing and growing the performing loan portfolio by seizing opportunities both domestically and internationally by using its excess liquidity to the benefit of the market, as well as on continuing its digital transformation journey, the optimisation of corporate governance and the adaptation to the expanding compliance framework. The establishment of a debt servicer is expected to facilitate the price discovery for problematic loans and help the development of a market for distressed assets in Cyprus, attracting international investor interest for such assets and expediting the resolution of problem loans.

47

Notes to the Interim Condensed Consolidated Financial Statements

23. Sale of Non-Performing Loan and Real Estate Management Business by the Bank to APS Debt Servicing Cyprus Ltd (continued)

NPLs with a value of approximately €2,3 billion and real estate assets with a value of approximately €150 million will be managed by APS Cyprus in consideration for an administration fee payable by the Bank to APS Cyprus. The administration fee to be paid to APS Cyprus will comprise of both a fixed and a variable element. The level of fees payable to APS Cyprus varies according to the progress of collections with the majority of the fees being driven by the successful resolution of the portfolio.

The net gain from the transaction that is included in the income statement for the six-month period ended 30 June 2017 under “Net income from fees, commissions, net gains on disposal and revaluation of foreign currencies and financial instruments and other income” is analysed as follows: €'000

Cash consideration 13.726

Fair value of Deferred cash consideration 6.345

Total consideration 20.071

Less: Bank’s capital injection to APS Cyprus (6.725)

13.346

Less: 51% of the carrying amount of tangible assets sold (42)

13.304

Add: Re-measurement of investment in associate as per IFRS 10 6.686

19.990

Less: Expenses directly relating to the transaction (978)

Net gains from the transaction 19.012

On completion of the transaction the Bank recognised an investment in associate based on the fair value of its retained interest in the newly established entity according to the provisions of the IFRS 10 amounting to €6.811 million. 24. Decisions of the Annual General Meeting of the Shareholders of Hellenic Bank Public Company Limited The 43rd Annual General Meeting (“AGM”) of the Shareholders of the Bank, which was held on Wednesday 24h May 2017, was attended by 62 shareholders, either physically or by proxy, representing 148.995.435 shares, being 75,07% of the issued share capital of the Bank. The AGM examined and approved the Directors’ Report, the Financial Statements and the Auditors’ Report for the year ended 31st December 2016. Ms Irena A. Georgiadou, Mr Marinos S. Yannopoulos, Mr Christodoulos A. Hadjistavris and Mr Georgios Fereos were re-elected as Members of the Board of Directors, following voting by poll. The AGM examined and approved the Remuneration Policy Report for the year 2016 and fixed the Remuneration of the Directors for the year 2017. KPMG Limited was re-appointed as Auditors of the Bank for 2017 and the AGM decided that the Board of Directors was authorised to fix the remuneration of the Auditors.

The AGM additionally approved, that the Board of Directors is authorised to exercise all powers of the Bank to issue and allot to the chief executive officer of the Bank up to €200.000 worth of ordinary shares of the Bank of nominal value of €0,50 for the twelve months of his employment as chief excutive officer, as the Board of Directors may in its sole unfetted discertion determine under a number of conditions. During the AGM Ms Irena Georgiadou stated her intention not to continue servicing as Chairwoman of the Board of Directors. It is noted that Ms Georgiadou continues to be a member of the Board of Directors after her re-appointment as mentioned above.

48

Notes to the Interim Condensed Consolidated Financial Statements 24. Decisions of the Annual General Meeting of the Shareholders of Hellenic Bank Public Company Limited (continued) Following the AGM, the Board of Directors convened and decided to initiate the process for identifying the appropriate candiadate for the position of the Chairperson of the Board. The Board also decided that, in the meantime the Senior Independent Director of the Board Dr Evripides Polykarpou will be fulfilling the duties of the Chairman of the Board of Directors. Detailed announcement of the decisions of the AGM is available on the Bank’s official site www.hellenicbank.com. 25. Bank recovery and resolution directive (BRRD) The Bank within the framework of the Bank Recovery and Resolution Directive (BRRD) is subject to the minimum requirement for own funds and eligible liabilities (MREL). The framework, which entered into effect on 1 January 2016, provides authorities with a credible set of tools to intervene sufficiently early and quickly in an unsound or failing institution so as to ensure the continuity of the institution’s critical financial and economic functions, while minimising the impact of an institution’s failure on the economy and financial system. This is achieved by requiring banks to have a funding structure with a certain proportion of liabilities that can be written off or converted into equity in the event of a bank failure (that is: “bailed-in”). Such liabilities, in combination with equity, are known as MREL. The MREL requirements and criteria within the BRRD have recently been elaborated further by the EBA in the final version of a Regulatory Technical Standard. The regulatory authorities are currently in the process of establishing the MREL requirement on a case-by-case basis. More specifically, the Single Resolution Board and the Local Resolution Authority are currently carrying out workshops and discussions with regulated institutions. 26. Events after the reporting period Appointment of Mr Lars Kramer as an Executive Member of the Board of Directors of the Bank On the 10th of July 2017 the Bank announced the appointment of Mr Lars Kramer as an Executive Member of the Board of Directors of the Bank and the resignation of Mr G.Fereos from the Board of Directors, with effect from 10 July 2017. Mr G.Fereos will continue to serve the Bank as Group General Manager, Group Corporate Development. The appointment of Mr L.Kramer has been approved by the European Central Bank. Gradual abolition of Prudential liquidity framework by Central Bank of Cyprus (CBC) On 15 September 2017, the Central Bank of Cyprus (CBC) informed banks that reductions of the requirements of prudential liquidity in CBC’s Directives on the Computation of Prudential Liquidity in Euro and Foreign Currencies are being implemented, with immediate effect. CBC’s intention is to maintain the national regulatory requirements on prudential liquidity, in addition to the requirements of Basle III, after the 31st of December 2017 and to gradually abolish them by the 31st of December 2018. The full abolition will take effect in three stages. For the implementation of this decision, the Central Bank of Cyprus will consult with the European Central Bank and will send a relevant disclosure to various bodies of the European Union, requesting the approval of the national measure and its gradual abolition by the 31st of December 2018. The gradual abolition of national measures by the 31st of December 2018 will be implemented in case CBC receives the requested approval. It is inferred that in case the requested approval is not granted, the national measures will be terminated on 31 December 2017. The procedure for the review of the application is expected to be completed within December of the current year. 27. Approval of Financial Statements The Interim Condensed Consolidated six-month Financial Statements were approved by the Board of Directors on the 28th of September 2017.

49

HELLENIC BANK GROUP Interim Management Report for the six-month period ended 30 June 2017 Results Overview The loss for the six-month period ended 30 June 2017 amounted to €22,9 million (30 June 2016: Profit €1,1 million). The Group’s profitability before impairment losses and provisions to cover credit risk, improved on a Quarter on Quarter (QoQ) basis, mainly due to a net gain of €19,0 million from the disposal of the operations of the Arrears Management Division (AMD) of the Bank since the transaction was completed at the end of 2Q2017. Profit from ordinary operations before impairment losses and provisions to cover credit risk for the six-month period ended 30 June 2017 amounted to €51,8 million (30 June 2016: €58,8 million). Loss attributable to the Bank’s shareholders for the six-month period ended 30 June 2017 amounted to €23,4 million (30 June 2016: Gain €0,7 million). During the second quarter of 2017 the Bank proceeded with certain amendments to the parameters and assumptions for estimating the recoverable amount of property collateral values used in its provisioning methodology, relating primarily to the elimination of forward looking indexation in its collateral prices and the adoption of higher liquidation discounts at the point of sale. The amendments were made in the context of the International Financial Reporting Standards and take into account the Bank’s accelerated plans for resolving problem loans, latest market developments, as well as the ongoing regulatory engagement with ECB as part of the 2017 Supervisory Review and Evaluation Process (“SREP”) and resulted to an additional provisioning charge. Income Statement Analysis Net interest income Net interest income for the six-month period ended 30 June 2017 was €66,3 million, down by 11% compared to €74,7 million for the six-month period ended 30 June 2016. The main factors that contributed to the decrease of net interest income were the decreasing lending rates in 2017 compared to early 2016 primarily affecting the performing loan portfolio and the decreased carrying amount of the impaired2 loan portfolio. 2Q2017 net interest income amounted to €32,6 million and was down by 4% compared to €33,8 million in 1Q2017, with the reduction being mainly driven by the decreased carrying amount of the impaired2 loan portfolio. The Group’s net interest margin for the six-month period ended 30 June 2017 amounted to 2,0% (30 June 2016: 2,1%). Non-interest income Total non-interest income for the six-month period ended 30 June 2017 amounted to €62,2 million and increased by 10% compared to the six-month period ended 30 June 2016 mainly due to higher other income which amounted to €32,4 million for the six-month period ended 30 June 2017. Other income in the six-month period ended 30 June 2017 included a net gain of €19,03 million from the disposal of the operations of the Arrears Management Division (AMD) of the Bank (2Q2017) and a gain of €2,1 million from the disposal of the 100% shareholding in Anolia Holdings Ltd which owned property acquired in satisfaction of debt (1Q2017). Net gains on disposal and revaluation of foreign currencies and financial instruments for the six-month period ended 30 June 2017 amounted to €7,7 million and decreased by 63% compared to the six-month period ended 30 June 2016, with the reduction being mainly due to the gain of €14,0 million from the disposal of the shares in Visa Europe Limited included in the six-month period ended 30 June 2016. Net fee and commission income for the six-month period ended 30 June 2017 was €22,1 million down by 13% compared to the six-month period ended 30 June 2016, with the decrease mainly reflecting reduced fees and commission income in the International Business Division due to the Bank’s efforts to reposition its strategy on the said business. Total non-interest income for 2Q2017 amounted to €39,8 million, up by 78%, compared to 1Q2017. The increase was due to the aforementioned gains on disposal of €19,0 million in 2Q2017 vs. €2,1 million in 1Q2017 included in other income. Expenses Total expenses for the six-month period ended 30 June 2017 amounted to €76,7 million, increased by 6% compared to the €72,3 million for the six-month period ended 30 June 2016, primarily due to higher staff costs. Total expenses for 2Q2017 of €37,6 million were down by 4% compared to the €39,0 million for 1Q2017, mainly due to the decrease in administrative and other expenses.

2 As defined in IAS39. 3 The consideration for the sale of the AMD operations was €20,6 million (cash consideration €13,7 million and deferred consideration €6,9 million).

50

Interim Management Report for the six-month period ended 30 June 2017 Income Statement Analysis (continued) Expenses (continued) The cost to income ratio for the six-month period ended 30 June 2017 was 59,7%, compared to the 55,2% for the six-month period ended 30 June 2016. The cost to income ratio for 2Q2017 was 52,0%, compared to the 69,6% for 1Q2017. Staff costs Staff costs for the six-month period ended 30 June 2017 amounted to €43,4 million (30 June 2016: €40,7 million) and accounted for 57% of the Group’s total expenses. The 7% increase, comparing the six-month period ended 30 June 2017 to the six-month period ended 30 June 2016 was mainly due to the increase in the number of employees from 1.611 as at 30 June 2016 to 1.653 as at 30 June 2017 and the remainder due to the recently signed collective agreement with the Cyprus Union of Bank Employees (ETYK) which is effective from 1st January 2017. Most of the additional recruitments were made in the Arrears Management Unit and Compliance Unit. Staff costs for 2Q2017 amounted to €22,5 million, up by 8% compared to 1Q2017, mainly due to the half year effect of the said collective agreement. By allocating the provision evenly in the six-month period, the QoQ increase is adjusted to 3%. Administrative and other expenses Total administrative and other expenses for the six-month period ended 30 June 2017 amounted to €29,6 million with 3% increase compared to €28,7 million for the six-month period ended 30 June 2016. Administrative and other expenses for 2Q2017 totalled €13,3 million and were down by 19% compared to 1Q2017. The decrease was mainly attributable to lower cost of advisory services in 2Q2017 and due to a charge of €2,0 million for the contribution made to the Singe Resolution Fund (SRF)4, recognised in 1Q2017. Excluding the charge of €2,0 million, the QoQ decrease in administrative and other expenses is adjusted to 7%. Impairment losses and provisions to cover credit risk Total impairment losses and provisions to cover credit risk amounted to €77,6 million for the six-month period ended 30 June 2017 and compared to the €48,8 million the six-month period ended 30 June 2016 , recorded an increase of 59%. The provision charge for 2Q2017 amounted to €50,3 million, up by 84% compared to 1Q2017. During the second quarter of 2017 the Bank has proceeded with certain amendments to the parameters and assumptions for estimating the recoverable amount of property collateral values used in its provisioning methodology, relating primarily to the elimination of forward looking indexation in its collateral prices and the adoption of higher liquidation discounts at the point of sale. The amendments were made in the context of the International Financial Reporting Standards and take into account the Bank’s accelerated plans for resolving problem loans, latest market developments, as well as the ongoing regulatory engagement with the European Central Bank (“ECB”) as part of the 2017 Supervisory Review and Evaluation Process (“SREP”). This resulted in a cost of risk (annualised) for the six-month period ended 30 June 2017 of 3,8% (31 December 2016: 2,8%) . Defererd tax asset

A deferred tax asset of €3,2 million was recognised in 2Q2017, resulting from the tax losses of the six-month

period ended 30 June 2017. During the six-month period ended 30 June 2016, a deferred tax asset of €8,5

million was derecognised and charged in the Income Statement. The derecognition of the deferred tax asset

arose from tax losses for which the Bank considered that it was no longer probable that the related tax benefit

will be realised.

4 An amended legislation on the “Special Levy on Credit Institutions Law (Amended) 2017” is to be presented for approval at the House of Representatives.

51

Interim Management Report for the six-month period ended 30 June 2017 Statement of Financial Position Analysis As at 30 June 2017, the Group’s total assets amounted to €6,8 billion, down by 4% compared to 31 December 2016. The decrease was mainly driven by the decrease in investment assets and loans and advances. Deposits Customer deposits amounted to €5,8 billion as at 30 June 2017 (31 December 2016: €6,1 billion,). They comprised of €4,6 billion deposits in Euro (Euro deposits as at 31 December 2016: €4,6 billion,) and €1,2 billion deposits in foreign currencies (foreign currency deposits as at 31 December 2016: €1,5 billion), mostly in US Dollars. Trends in customer deposits reflect the Bank’s strategy to maintain a low cost of deposits taking into account its existing strong liquidity position. The €0,3 billion decrease in the foreign currency deposits, of which the €0,1 billion was mainly due to the weakening of the US Dollar against the Euro, is aligned with the Bank’s efforts to reposition its strategy on the operations of the International Business Unit. The Bank’s deposits market share5 as at 30 June 2017 was 12,1% (31 December 2016: 12,6%). Loans Total new lending approved for the six-month period ended 30 June 2017 reached €184,8 million (31 December 2016: €353,7 million). The Bank continued providing lending to creditworthy businesses and households while examining other growth opportunities. Gross loans as at 30 June 2017 amounted to €4.203 million, down by 2% compared to 31 December 2016 (€4.300 million). The performing loan portfolio increased by 3% while the non-performing loan portfolio decreased by 6% offsetting the new lending effect on total gross loans. During the six-month period ended 30 June 2017 exposures of €81,6 million were written off (31 December 2016: €160,5 million). The Bank’s loan market share5 as at 30 June 2017 was 7,7% (31 December 2016: 7,4%). The net loans to deposits ratio remained stable at 47,9% as at 30 June 2017 (31 December 2016: 47,9%) due to

the same pace of the decline in deposits and net loans.

Loan Portfolio Quality Committed efforts to resolve problematic loans continued. The level of NPEs6 has been reduced to €2.354 million at 30 June 2017, down by 6% compared to the €2.504 million at 31 December 2016. Terminated loans included in NPEs amounted to €1.536 million as at 30 June 2017 (31 December 2016: €1.593 million). Gross loans with forbearance measures as at 30 June 2017 amounted to €1.214 million (31 December 2016: €1.311 million). During the six-month period ended 30 June 2017 the Bank continued focusing on the restructuring of NPEs, using a toolset of sustainable solutions, such as debt to asset swaps, balance/instalment reductions, extensions of maturity and grace periods. An amount of €296 million7 relating to total customers’ exposures, was restructured during the six-month period ended 30 June 2017, while an amount of € €81,6 million was written off as part of the whole restructuring process. The stock of properties held for sale, which are mostly from customers’ debt settlement, amounted to €140,3 million as at 30 June 2017 (31 December 2016: €117,7 million). The movement in the balance of stock of properties held for sale for the six-month period ended 30 June 2017 included an amount of €63,4 million of additions and an amount of €40,8 million8 of disposals. Within the framework of tackling the Group’s asset quality, the Bank has signed an agreement with APS Holding a.s (APS) in January 2017 for the management of real estate assets and servicing of the NPEs portfolio. The agreement entailed the disposal of the operations of the Bank’s Arrears Management Division (AMD) to a newly established entity APS Debt Servicing Cyprus Ltd (“APS Cyprus”), while the ownership of the real estate and loan portfolio remains with the Bank. The completion of the transaction and the transfer of business was effected on 30 June 2017 while APS Cyprus commenced operations on 3 July 20179. By creating the first debt servicing and real estate asset management platform in the Cypriot market, the Bank will be able to effectively deal with its NPEs in an accelerated and effective way through leveraging on the knowhow and expertise of APS. Furthermore, it will allow the Bank to better allocate its resources on managing and growing the performing loan book by using its excess liquidity to the benefit of the market.

5 Source: Central Bank of Cyprus (CBC) and Hellenic Bank. 6 Including the contractual interest on impaired loans. 7 As per EBA definition - account basis (includes debt to asset settlements and write-offs). 8 In 1Q2017, the Bank disposed the 100% shareholding in Anolia Holdings Ltd with a book value of €40,6 million. 9 See announcement dated 3 July 2017 (Sale of Non-Performing Loan and Real Estate Management Business by Hellenic Bank to APS

Debt Servicing Cyprus Ltd) posted on the Group’s website www.hellenicbank.com (Investor Relations).

52

Interim Management Report for the six-month period ended 30 June 2017 Statement of Financial Position Analysis (continued) The NPEs to gross loans ratio as at 30 June 2017 was reduced to 56,0% (31 December 2016: 58,2%). Accumulated impairment losses10, amounted to €1.423 million as at 30 June 2017 (31 December 2016: €1.374 million) and represented 33,9% of the total gross loans (31 December 2016: 32,0%). The NPEs provision10 coverage stood at 60,4% as at 30 June 2017 (31 December 2016: 54,9%), with the

overall coverage taking into account tangible collaterals11 totalling 115,3%. The increased provisions in 2Q2017,

as mentioned above, further strengthen the Group’s ability to accelerate its plans for balance sheet de-risking

and deleveraging.

For more details for the Loan portfolio please refer to Note 9 to these Interim Condensed Consolidated Financial Statements. Investment Assets

The total value of investment assets amounted to €3,6 billion as at 30 June 2017 (31 December 2016: €3,8 billion) and represented 53,6% of the total assets of the Group (31 December 2016: 54,0%). Investment assets are comprised of cash and balances with Central Banks, placements with other banks, investments in bonds, investments in shares and collective investment units, and investment in associate. The fall in total investment assets was mainly driven by the reduction in investments in bonds. The Group’s cash and placements with other banks and Central Banks amounted to €2,5 billion as at 30 June 2017 (31 December 2016: €2,6 billion), and included a placement of €2,0 billion with ECB (31 December 2016: €2,0 billion). Most foreign currency placements were with P1 rated banks12.

The Group’s investments in bonds amounted to €1,1 billion as at 30 June 2017 (31 December 2016: €1,1 billion), which represented 15,8% of total assets (31 December 2016: 16,3%) and were down by 7%. The decrease was mainly due to USD bonds, affected by the weakening of the US Dollar against the Euro. The Group’s investments in bonds comprised mainly of Cyprus Government Bonds and supranational organisations debt securities. 38% of the €1,1 billion debt securities are Aaa rated13. The Cyprus Government Bonds14 held by the Group at 30 June 2017 amounted to €666 million (31 December 2016: €643 million) of which €488 million will mature within 5 and 10 years and €178 million within 1 and 5 years. The Group’s investment in associate as at 30 June 2017 amounted to €6,8 million and corresponded to the fair value of the Bank’s retained interest in the newly established entity, resulted from the agreement15 with APS for the management of real estate assets and servicing of the NPEs portfolio. Capital Base and Adequacy

The Capital Adequacy Ratios of the Group and the Bank under Pillar I are above the minimum regulatory requirements and are further described in Note 22 to these Interim Condensed Consolidated Financial Statements. Details for the capital management of the Group for the year 2016 are disclosed in Note 48 to the Annual Financial Statements for the year ended 31 December 2016. Related party transactions

Related party transactions for the six-month period ended 30 June 2017 are presented in Note 20 to these Interim Condensed Consolidated Financial Statements.

10 Individual and collective impairment losses. 11 Based on open market values (capped at client exposure). 12 Prime-1 short term rating by Moody’s. 13 Moody’s instrument ratings or equivalents - based on the Regulation (EU) 575/2013 (CRR) and the Directive 2013/36/EU (CRD IV) for the RWAs calculation (as per Section 4, Article 138 of the regulation). 14 Republic of Cyprus is currently being rated as B1 by Moody’s, BB- by Fitch, BB+ by S&P. 15 See announcement dated 3 July 2017 (Sale of Non-Performing Loan and Real Estate Management Business by Hellenic Bank to APS Debt Servicing Cyprus Ltd) posted on the Group’s website www.hellenicbank.com (Investor Relations).

53

Interim Management Report for the six-month period ended 30 June 2017 Risk Management The main risks to which the Group is exposed and how they are monitored and managed are presented in Note 48 to the Annual Financial Statements for the year ended 31 December 2016. In addition, the accounting policies that are deemed critical to the Group’s results and financial position and which involve significant estimates and judgements are set out in Note 3 to these Interim Condensed Consolidated Financial Statements. Strategic Targets and Outlook In delivering its strategic plans, Hellenic Bank remains committed to be a strong bank that meets the

expectations of the economy, society, investors and shareholders. During the course of the crisis, the Bank has

retained its reputation for stability and confidence and is now focusing on strengthening and improving its

market position.

The Bank’s strategy focuses on two aspects: “Fix” and “Build”. The “Fix” aspect predominantly relates to the

reduction of the high level of NPEs. The “Build” aspect of the strategy relates to focused growth through new

lending and strengthening of customer relationships. The Bank intends to continue to carry out its role in

supporting the local economy while safeguarding its shareholders’ value through prudent policies and in line

with the Bank's target risk profile. At the same time, the Bank is continuing repositioning its International

Banking Division strategy reflecting the changing regulatory environment with specific focus on anti-money

laundering issues. The Bank’s strategy also includes advancements in technology, enhancement of the

customer service, as well as simplification of procedures and processes.

The Bank, advancing towards decisive actions to tackle its loan portfolio quality, disposed the operations of the

Arrears Management Division, to a newly established entity APS Debt Servicing Cyprus Ltd (“APS Cyprus”)

which is a member of the APS Holding a.s. (“APS Holding”) group of companies. The Bank will retain the

ownership of the portfolio of NPEs and the real estate assets which will be serviced by the new company upon

establishment. APS Cyprus is 51% owned by APS Holding and 49% by the Bank. The completion of the

transaction and the transfer of business was effected on 30 June 2017 while APS Cyprus commenced

operations on 3 July 2017.

The transaction is consistent with the Group’s strategy of tackling the asset quality problems of its portfolio and

to develop its activities within a prudent risk management framework. Furthermore, it is in line with the

European Central Bank, International Monetary Fund and European Bank for Reconstruction and Development

guidelines on the management of NPEs. Through the creation of the first debt servicing platform in the Cypriot

market, the Bank will be able to effectively tackle its NPEs in an accelerated way and with higher recoveries,

leveraging on the knowhow, proven expertise and technical experience of APS Holding. The Bank will also be

in a stronger position to focus its resources on managing and growing the performing loan portfolio by seizing

opportunities both domestically and internationally, as well as on continuing its digital transformation journey,

the optimization of corporate governance and the adaptation to the expanding compliance framework. The

establishment of a debt servicer is expected to facilitate the price discovery for problem loans and help the

development of a market for distressed assets in Cyprus, attracting international investor interest for such

assets and expediting the resolution of problem loans.

As part of implementing its strategic targets, the Bank continues its pivotal role in the recovery of the real

economy supporting creditworthy Cypriot businesses and households with a comprehensive range of quality

banking services. The Bank maintains sufficient liquidity which allows the exploitation of opportunities,

maintaining its focus on organic growth. The Bank estimates that there is potential and opportunities in various

sectors of the economy. The focus of new loans will be to companies that increase the competitiveness and

productivity of the country, such as in the sectors of retail and commercial activities, manufacturing, tourism and

shipping by targeting specific customer profiles. At the same time, loans to the retail sector will be geared

toward mortgages, small loans to new customers and supporting current clients who are deemed viable.

54

Interim Management Report for the six-month period ended 30 June 2017

Through its focus on its “Fix” and “Build” initiatives, the Group has all the ingredients to continue the

implementation of its strategy. At the same time, the operating environment remains challenging and the Bank

will remain vigilant of developments to turn them into opportunities both in Cyprus and internationally.

Events after the reporting period The events after the reporting period of 30 June 2017 are presented in Note 26 to these Interim Condensed Consolidated Financial Statements.

55

DECLARATION BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE BANK OFFICIALS

RESPONSIBLE FOR THE DRAFTING OF THE FINANCIAL STATEMENTS In accordance with article 9(3)(c) and (7) of the 2007 Law on Transparency Requirements (Securities Listed for Trading on a Regulated Market), we the Members of the Board of Directors and the Bank officials responsible for the drafting of the Financial Statements of Hellenic Bank Public Company Ltd (the “Bank”) for the six-month period ended 30 June 2017, confirm that to the best of our knowledge: (a) the interim Financial Statements presented in pages 3 to 48:

(i) have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union and the provisions of article (9), paragraph (4) of the Cyprus Companies Law, and

(ii) give a true and fair view of the assets and liabilities, the financial position and the profits or losses

of Hellenic Bank Public Company Ltd and of the entities included in the Consolidated Financial Statements, as a whole and

(b) the Group Management Report of the Board of Directors provides a fair review of the developments and

performance of the business as well as the position of Hellenic Bank Public Company Ltd and of the entities included in the Consolidated Financial Statements, as a whole, together with a description of the major risks and uncertainties that they face.

Members of the Board of Directors Dr Evripides A. Polykarpou Non-Executive Chairman............................................................ Marinos S. Yannopoulos Non-Executive Vice Chairman …................................................... Andreas Christofides Non-Executive Member of the Board................................................ Irena A. Georgiadou Non-Executive Member of the Board................................................ Marianna Pantelidou Neophytou Non-Executive Member of the Board............................................... David Whalen Bonanno Non-Executive Member of the Board................................................ Lambros Papadopoulos Non-Executive Member of the Board................................................ Christodoulos A. Hadjistavris Non-Executive Member of the Board................................................

Andrew Charles Wynn Non-Executive Member of the Board................................................

Stephen John Albutt Non-Executive Member of the Board................................................ Demetrios Efstathiou Non-Executive Member of the Board................................................ Ioannis A. Matsis Executive Member of the Board............................................... Lars Kramer Executive Member of the Board...............................................

Company official responsible for the drafting of the Financial Statements Lars Kramer, Group Chief Financial Officer

Nicosia, 28 September 2017

Commentary - Group Results for the six-month period ended 30 June 2017 1

COMMENTARY

Group Results for the six-month period ended 30 June 2017

28 September 2017

BUILDING A STRONGER BANK, BY MAKING FURTHER PROGRESS IN OUR STRATEGIC

PRIORITIES

6M2017 FINANCIAL PERFORMANCE SUMMARY

Profit before provisions of €51,8 million, compared to €58,8 million in 6M2016

Net gain of €19,0 million from the disposal of the operations of the Arrears Management

Division as a result of the agreement with APS Holding a.s.

2Q20171 charge for impairment losses and provisions to cover credit risk of €50,3 million

Loss for the period of €22,9 million, compared to €1,1 million profit for 6M2016

STRONG AND LIQUID BALANCE SHEET

Common Equity Tier 1 (CET 1) of 13,88% and total capital adequacy ratio of 17,55%

Capital ratios above minimum regulatory requirements

Ample liquidity reflecting a solid deposit franchise

Low ratio of net loans to deposits of 47,9% enables business expansion

EXECUTING THE “FIX” AND “BUILD” STRATEGY

Successful completion of the transaction with APS Holding a.s. for the creation the first debt

servicing and real estate asset management platform in the Cypriot market

Non-performing exposures2 (NPEs) were reduced to €2.354 million, compared to €2.504

million as at 31 December 2016

NPEs to gross loans ratio reduced to 56,0%

Provision coverage improved to 60,4%, while taking into account tangible collateral, overall

coverage was 115,3%, further strengthening the Group’s ability to accelerate its plans for

balance sheet de-risking and deleveraging

High loan restructuring activity, with €296 million restructurings3 during 6M2017

New lending momentum remains strong, with €184,8 million of new lending approved during

6M2017 and a growth of 3% in the performing loan portfolio

In 6M2017 the stock of properties acquired in satisfaction of debt amounted to €63,4 million4

whereas the disposals of stock of properties held for sale amounted to €40,8 million4

Hellenic Bank Public Company Ltd (“Hellenic Bank”) profile

Headquartered in Nicosia (Cyprus), Hellenic Bank is the third largest financial institution in Cyprus and offers a wide range of banking and

financial services, including financing, investment, insurance services, as well as custodian and factoring services. Its network includes 52

branches in Cyprus as well as 4 representative offices. At 30 June 2017, Hellenic Bank had total assets and shareholders’ equity of €6,8

billion and €558,8 million, respectively.

1 The increased provisions were the result of the Bank’s accelerated plans for resolving problem loans, latest market developments, as well as the ongoing regulatory engagement with the European Central Bank (ECB). 2 Including the contractual interest on impaired loans. 3 As per European Banking Authority (EBA) definition - account basis (includes debt to asset settlements and write-offs). 4 Book value.


CEO STATEMENT

Commenting on the Group’s financial results, Mr. Υannis Matsis, the Group’s Chief Executive Officer,

stated: “We achieved further progress in executing our strategic priorities during the second quarter of 2017. We

reduced NPEs for a seventh consecutive quarter and maintained strong momentum by completing about €122

million of loan restructurings. Taking into account the ECB dialogue for SREP 2017 together with the Bank’s

accelerated plans for resolving problem loans, and in the context of the International Financial Reporting

Standards, we proceeded with certain amendments in the parameters and assumptions used in our provisioning

methodology, resulting in an elevated provisioning charge for the second quarter of 2017. This resulted in an

improved provisioning coverage of NPEs to more than 60%.

Resolving our problem loans is paramount and we continue to explore all available options to decisively reduce

them. In June 2017 we proceeded with the creation of the first debt servicing platform in Cyprus, through the

sale of the non-performing loan and real estate management business to APS Cyprus which resulted in a net

accounting gain of €19 million. Through this platform, we will be able to effectively tackle our NPEs in an

accelerated way and with higher recoveries, leveraging on the knowhow, proven expertise and technical

experience of APS Holding a.s. Furthermore, the establishment of an independent debt servicer is expected to

facilitate the price discovery for problem loans and help the development of a market for distressed assets in

Cyprus.

Due to the elevated provisions, the Group reported a loss after tax of €13 million for the quarter and a total loss

of €23 million for the six-month period. Despite this loss, the Group’s capital position remains strong. The

Group’s capital adequacy ratio totalled 17,55% at the end of June 2017, comfortably above the minimum

regulatory requirements.

The Bank continues to support creditworthy households and businesses with a comprehensive range of quality

banking services. About €185 million advances were approved during the first half of 2017, reflecting the

increased new lending momentum compared to a year earlier.”


PERFORMANCE HIGHLIGHTS

Income Statement highlights (€million) 6M-2017 6M-2016 ∆ YoY 2Q2017 1Q2017 ∆ QoQ

Profit from ordinary operations before

impairment losses and provisions to cover

credit risk

51,8 58,8 -12% 34,8 17,1 +104%

Total impairment losses and provisions to

cover credit risk (77,6) (48,8) +59% (50,3) (27,3) +84%

Taxation 2,9 (8,9) -133% 2,8 0,2 +1.635%

(Loss)/profit for the period (22,9) 1,1 -2.173% (12,8) (10,1) +27%

(Loss)/profit attributable to the shareholders

of the parent company (23,4) 0,7 -3.417% (12,9) (10,5) +22%

Key performance Indicators (KPIs)5 6M-2017 6M-2016 ∆ YoY 2Q2017 1Q2017 ∆ QoQ

Net Interest Margin (%) 2,0% 2,1% -12 bps 2,0% 2,0% -2 bps

Cost to income ratio (%) 59,7% 55,2% +451 bps 52,0% 69,6% -1.759 bps

Cost of risk (%) 3,8% 2,4% +136 bps 4,9% 2,6% +236 bps

Return on equity (%) -8,3% 0,2% -856 bps -9,2% -7,5% -172 bps

Return on average assets (%) -0,7% 0,0% -70 bps -0,8% -0,6% -15 bps

(Loss)/Earnings per share (cent €) (11,8) 0,4 -3.416% (6,5) (5,3) +22%

Financial Position highlights (€million) 30.06.2017 31.12.2016 ∆

Gross loans 4.203 4.300 -2%

Gross Non Performing Loans (NPEs) 2.354 2.504 -6%

Gross Performing Loans 1.849 1.796 3%

Loans (net of provisions for impairment) 2.780 2.926 -5%

Investment assets 3.623 3.797 -5%

Total assets 6.754 7.038 -4%

Deposits 5.805 6.111 -5%

Shareholders’ Funds 559 563 -1%

Risk Weighted Assets (RWAs) 3.497 3.744 -7%

Key Performance Indicators (KPIs)5 30.06.2017 31.12.2016 ∆

CET 1 Ratio (%) 13,88% 13,83% +5 bps

Capital Adequacy Ratio (%) 17,55% 17,24% +31 bps

NPEs to gross loans (%) 56,0% 58,2% -221 bps

NPEs provision coverage (%) 60,4% 54,9% +556 bps

Net loans to deposits ratio (%) 47,9% 47,9% +1 bps

Tangible book value per share (€) 2,7 2,7 -2%

5 For definitions of KPIs refer to Appendix 2


1. ANALYSIS OF THE FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDED 30

JUNE 2017

1.1 Income Statement Analysis

Net interest income for 6M2017 was €66,3 million, down by 11% compared to €74,7 million in 6M2016. The

main factors that contributed to the decrease of net interest income were the decreasing lending rates in 2017

compared to early 2016 primarily affecting the performing loan portfolio and the decreased carrying amount of

the impaired6 loan portfolio. 2Q2017 net interest income amounted to €32,6 million and was down by 4%

compared to €33,8 million in 1Q2017, with the reduction being mainly driven by the decreased carrying amount

of the impaired6 loan portfolio. The Group’s net interest margin for 6M2017 amounted to 2,0% (6M2016:

2,1%).

Total non-interest income for 6M2017 amounted to €62,2 million and increased by 10% compared to 6M2016

mainly due to higher other income which amounted to €32,4 million for 6M2017. Other income in 6M2017

included a net gain of €19,07 million from the disposal of the operations of the Arrears Management Division

(AMD) of the Bank (2Q2017) and a gain of €2,1 million from the disposal of the 100% shareholding in Anolia

Holdings Ltd which owned property acquired in satisfaction of debt (1Q2017). Net gains on disposal and

revaluation of foreign currencies and financial instruments for 6M2017 amounted to €7,7 million and decreased

by 63% compared to 6M2016, with the reduction being mainly due to the gain of €14,0 million from the disposal

of the shares in Visa Europe Limited included in 6M2016. Net fee and commission income for 6M2017 was

€22,1 million down by 13% compared to 6M2016, with the decrease mainly reflecting reduced fees and

commission income in the International Business Division due to the Bank’s efforts to reposition its strategy on

the said business. Total non-interest income for 2Q2017 amounted to €39,8 million, up by 78%, compared to

1Q2017. The increase was due to the aforementioned gains on disposal of €19,0 million in 2Q2017 vs. €2,1

million in 1Q2017 included in other income.

Total expenses for 6M2017 amounted to €76,7 million, increased by 6% compared to the €72,3 million for

6M2016, primarily due to higher staff costs. Total expenses for 2Q2017 of €37,6 million were down by 4%

compared to the €39,0 million for 1Q2017, mainly due to the decrease in administrative and other expenses.

Staff costs for 6M2017 amounted to €43,4 million (6M2016: €40,7 million) and accounted for 57% of the

Group’s total expenses. The 7% increase comparing 6M2017 to 6M2016 was mainly due to the increase in the

number of employees from 1.611 as at 30 June 2016 to 1.653 as at 30 June 2017 and the remainder due to the

recently signed collective agreement with the Cyprus Union of Bank Employees (ETYK) which is effective from

1st January 2017. Most of the additional recruitments were made in the Arrears Management Unit and

Compliance Unit. Staff costs for 2Q2017 amounted to €22,5 million, up by 8% compared to 1Q2017, mainly due

to the half year effect of the said collective agreement. By allocating the provision evenly in the six-month

period, the QoQ increase is adjusted to 3%.

Total administrative and other expenses for 6M2017 amounted to €29,6 million with 3% increase compared

to €28,7 million for 6M2016. Administrative and other expenses for 2Q2017 totalled €13,3 million and were

down by 19% compared to 1Q2017. The decrease was mainly attributable to lower cost of advisory services in

2Q2017 and due to a charge of €2,0 million for the 2017 contribution made to the Singe Resolution Fund

(SRF)8, recognised in 1Q2017. Excluding the charge of €2,0 million, the QoQ decrease in administrative and

other expenses is adjusted to 7%.

The cost to income ratio for 6M2017 was 59,7%, compared to the 55,2% for 6M2016. The cost to income ratio

for 2Q2017 was 52,0%, compared to the 69,6% for 1Q2017.

Total impairment losses and provisions to cover credit risk amounted to €77,6 million for 6M2017 and

compared to the €48,8 million of 6M2016, recorded an increase of 59%. The provision charge for 2Q2017

6 As defined in IAS39. 7 The consideration for the sale of the AMD operations was €20,6 million (cash consideration €13,7 million and deferred consideration €6,9 million). 8 An amended legislation on the “Special Levy on Credit Institutions Law (Amended) 2017” is to be presented for approval at the House of Representatives.


amounted to €50,3 million, up by 84% compared to 1Q2017. During 2Q2017 the Bank has proceeded with

certain amendments to the parameters and assumptions for estimating the recoverable amount of property

collateral values used in its provisioning methodology, relating primarily to the elimination of forward looking

indexation in its collateral prices and the adoption of higher liquidation discounts at the point of sale. The

amendments were made in the context of the International Financial Reporting Standards and take into account

the Bank’s accelerated plans for resolving problem loans, latest market developments, as well as the ongoing

regulatory engagement with ECB as part of the 2017 Supervisory Review and Evaluation Process (“SREP”).

This resulted in a cost of risk (annualised) for 6M2017 of 3,8% (FY2016: 2,8%).

Loss before taxation for 6M2017 amounted to €25,8 million, compared to a profit of €10,0 million for 6M2016.

On a quarterly basis, a loss of €15,6 million was reported for 2Q2017 compared to a loss of €10,2 million for

1Q2017. The reported loss for 2Q2017 was primarily due to increased impairment losses and provisions to

cover credit risk.

A deferred tax asset of €3,2 million was recognised in 2Q2017, resulting from the tax losses of the 6M2017.

During 6M2016, a deferred tax asset of €8,5 million was derecognised and charged in the Income Statement.

The derecognition of the deferred tax asset arose from tax losses for which the Bank considered that it was no

longer probable that the related tax benefit will be realised.

Loss attributable to the Bank’s shareholders for 6M2017 amounted to €23,4 million (2Q2017: €12,9 million

loss, 1Q2017: €10,5 million loss) compared to a profit of €0,7 million in 6M2016.

1.2 Statement of Financial Position Analysis

As at 30 June 2017, the Group’s total assets amounted to €6,8 billion, down by 4% compared to 31 December

2016. The decrease was mainly driven by the decrease in investment assets and loans and advances.

1.2.1 Deposits and Loans

Customer deposits amounted to €5,8 billion as at 30 June 2017 (31 December 2016: €6,1 billion,). They

comprised of €4,6 billion deposits in Euro (Euro deposits as at 31 December 2016: €4,6 billion,) and €1,2 billion

deposits in foreign currencies (foreign currency deposits as at 31 December 2016: €1,5 billion), mostly in US

Dollars. Trends in customer deposits reflect the Bank’s strategy to maintain a low cost of deposits taking into

account its existing strong liquidity position. The €0,3 billion decrease in the foreign currency deposits, of which

the €0,1 billion was mainly due to the weakening of the US Dollar against the Euro, is aligned with the Bank’s

efforts to reposition its strategy on the operations of the International Business Unit.

The Bank’s deposits market share9 as at 30 June 2017 was 12,1% (31 December 2016: 12,6%).

Total new lending approved for 6M2017 reached €184,8 million (FY2016: €353,7 million). The Bank continued

providing lending to creditworthy businesses and households while examining other growth opportunities.

Gross loans as at 30 June 2017 amounted to €4.203 million, down by 2% compared to 31 December 2016

(€4.300 million). The performing loan portfolio increased by 3% while the non-performing loan portfolio

decreased by 6% offsetting the new lending effect on total gross loans. During 6M2017 exposures of €81,6

million were written off (FY2016: €160,5 million). The Bank’s loan market share9 as at 30 June 2017 was 7,7%

(31 December 2016: 7,4%).

The net loans to deposits ratio remained stable at 47,9% as at 30 June 2017 (31 December 2016: 47,9%) due

to the same pace of the decline in deposits and net loans.

9 Source: Central Bank of Cyprus (CBC) and Hellenic Bank.


1.2.2 Loan Portfolio Quality

Committed efforts to resolve problem loans continued. The level of NPEs10 has been reduced to €2.354 million

at 30 June 2017, down by 6% compared to the €2.504 million at 31 December 2016. Terminated loans included

in NPEs amounted to €1.536 million as at 30 June 2017 (31 December 2016: €1.593 million). Gross loans with

forbearance measures as at 30 June 2017 amounted to €1.214 million (31 December 2016: €1.311 million).

During 6M2017 the Bank continued focusing on the restructuring of NPEs, using a toolset of sustainable

solutions, such as debt to asset swaps, balance/instalment reductions, extensions of maturity and grace

periods. An amount of €296 million11 relating to total customers’ exposures, was restructured during 6M2017,

while an amount of €81,6 million was written off as part of the whole restructuring process. The stock of

properties held for sale, which are mostly from customers’ debt settlement, amounted to €140,3 million as at 30

June 2017 (31 December 2016: €117,7 million). The movement in the balance of stock of properties held for

sale for 6M2017 included an amount of €63,4 million of additions and an amount of €40,8 million12 of disposals.

Within the framework of tackling the Group’s asset quality, the Bank has signed an agreement with APS Holding

a.s (APS) in January 2017 for the management of real estate assets and servicing of the NPEs portfolio. The

agreement entailed the disposal of the operations of the Bank’s Arrears Management Division (AMD) to a newly

established entity APS Debt Servicing Cyprus Ltd (“APS Cyprus”), while the ownership of the real estate and

loan portfolio remains with the Bank. The completion of the transaction and the transfer of business was

effected on 30 June 2017 while APS Cyprus commenced operations on 3 July 201713. By creating the first debt

servicing and real estate asset management platform in the Cypriot market, the Bank will be able to effectively

deal with its NPEs in an accelerated and effective way through leveraging on the knowhow and expertise of

APS. Furthermore, it will allow the Bank to better allocate its resources on managing and growing the

performing loan book by using its excess liquidity to the benefit of the market.

The NPEs to gross loans ratio as at 30 June 2017 was reduced to 56,0% (31 December 2016: 58,2%).

Accumulated impairment losses14, amounted to €1.423 million as at 30 June 2017 (31 December 2016:

€1.374 million) and represented 33,9% of the total gross loans (31 December 2016: 32,0%).

The NPEs provision14 coverage stood at 60,4% as at 30 June 2017 (31 December 2016: 54,9%), with the

overall coverage taking into account tangible collaterals15 totalling 115,3%. The increased provisions in 2Q2017,

as mentioned above, further strengthen the Group’s ability to accelerate its plans for balance sheet de-risking

and deleveraging.

1.2.3 Investment Assets

The total value of investment assets amounted to €3,6 billion as at 30 June 2017 (31 December 2016: €3,8

billion) and represented 53,6% of the total assets of the Group (31 December 2016: 54,0%). Investment assets

are comprised of cash and balances with Central Banks, placements with other banks, investments in bonds,

investments in shares and collective investment units, and investment in associate. The fall in total investment

assets was mainly driven by the reduction in investments in bonds.

The Group’s cash and placements with other banks and Central Banks amounted to €2,5 billion as at 30

June 2017 (31 December 2016: €2,6 billion), and included a placement of €2,0 billion with ECB (31 December

2016: €2,0 billion). Most foreign currency placements were with P1 rated banks16.

The Group’s investments in bonds amounted to €1,1 billion as at 30 June 2017 (31 December 2016: €1,1

billion), which represented 15,8% of total assets (31 December 2016: 16,3%) and were down by 7%. The

10 Including the contractual interest on impaired loans. 11 As per EBA definition - account basis (includes debt to asset settlements and write-offs). 12 In 1Q2017, the Bank disposed the 100% shareholding in Anolia Holdings Ltd with a book value of €40,6 million. 13

See announcement dated 3 July 2017 (Sale of Non-Performing Loan and Real Estate Management Business by Hellenic Bank to APS Debt Servicing Cyprus Ltd) posted on the Group’s website www.hellenicbank.com (Investor Relations). 14 Individual and collective impairment losses. 15 Based on open market values (capped at client exposure). 16 Prime-1 short term rating by Moody’s.


decrease was mainly due to USD bonds, affected by the weakening of the US Dollar against the Euro. The

Group’s investments in bonds comprised mainly of Cyprus Government Bonds and supranational organisations

debt securities. 38% of the €1,1 billion debt securities are Aaa rated17.

The Cyprus Government Bonds18 held by the Group at 30 June 2017 amounted to €666 million (31 December

2016: €643 million) of which €488 million will mature within 5 and 10 years and €178 million within 1 and 5

years.

The Group’s investment in associate as at 30 June 2017 amounted to €6,8 million and corresponded to the

fair value of the Bank’s retained interest in the newly established entity, resulted from the agreement19 with APS

for the management of real estate assets and servicing of the NPEs portfolio.

1.2.4 Capital Base and Adequacy

The Capital Adequacy Ratios of the Group and the Bank under Pillar I, which are above the minimum

regulatory requirements, were as follows:

Capital Adequacy Ratios Group (transitional basis)

Group (fully

loaded basis)

Bank

(transitional

basis)

30.06.2017 31.12.2016 ∆ 30.06.2017 30.06.2017

Capital Adequacy Ratio (%) 17,55% 17,24% +31 bps 17,40% 17,51%

Tier 1 Ratio (%) 17,40% 17,01% +39 bps 17,34% 17,36%

Common Equity Tier 1 (CET 1) Ratio (%) 13,88% 13,83% +5 bps 13,63% 13,85%

Common Equity Tier 1 capital (€million) 486 518 -6% 477 485

Risk Weighted Assets (RWAs) (€million) 3.497 3.744 -7% 3.497 3.503

The increase of 5 basis points in CET 1 ratio (transitional basis) compared to 31 December 2016, was mainly

the result of the below:

i) overall decrease in CET1 capital, mainly due to:

- current period losses (effect of 68 basis points decrease) primarily due to increased provisions and

impairment losses to cover credit risk

- net increase in other comprehensive income mainly due to positive revaluation of bonds as prudentially

adjusted by the Bank for regulatory capital purposes (effect of 23 basis points increase)

- the increase in deferred tax assets arising from tax losses and intangible assets as well as gradual

elimination of transitional provisions (effect of 41 basis points decrease),

ii) οverall decrease in RWAs, mainly due to the decrease in net funded defaulted exposures (effect of 91

basis points increase).

As at 30 June 2017 the Leverage Ratio20 for the Group was 8,83% (Bank: 8,82%) compared to 8,75% (Bank:

8,74%) as at 31 December 2016. The Leverage Ratio on a fully loaded basis for the Group was formed at

8,80% (Bank: 8,79%) compared to 8,71% (Bank: 8,70%) as at 31 December 2016.

Supervisory Review and Evaluation Process 2015

As from 20 November 2015 the Bank is required to maintain, on a consolidated basis, a CET 1 capital ratio of

11,75%, as such ratio is defined in Regulation (EU) No 575/2013 of the European Parliament and of the

Council, including a fully loaded capital conservation buffer (CCB) of 2,5%. The ECB decision was based on the

SREP conducted on the information available with reference date 31 December 2014.

17 Moody’s instrument ratings or equivalents - based on the Regulation (EU) 575/2013 (CRR) and the Directive 2013/36/EU (CRD IV) for the RWAs calculation (as per Section 4, Article 138 of the regulation). 18 Republic of Cyprus is currently being rated as Ba3 by Moody’s, BB- by Fitch, BB+ by S&P. 19 See announcement dated 3 July 2017 (Sale of Non-Performing Loan and Real Estate Management Business by Hellenic Bank to APS Debt Servicing Cyprus Ltd) posted on the Group’s website www.hellenicbank.com (Investor Relations). 20 According to the Regulation (EU) No 2015/62 of the European Parliament and Council dated 10th of October 2014.


In February 2017, the House of Representatives of Cyprus passed into law, an amendment in the Business of

Credit Institutions Law which introduces a transitional period for the application of CCB requirement with

retrospective application from 1st January 2016 of 0,625% with full implementation from 1st January 2019 of

2,5%.

If the provisions of the above law amendment are applied the minimum CET 1 ratio is reduced to 9,875% for FY

2016.

Supervisory Review and Evaluation Process 2016

In December 2016, following ECB’s final decision in establishing prudential requirements, which was based on

the SREP conducted pursuant to Article 4(1)(f) of Regulation (EU) No 1024/2013 with reference date 31

December 2015, and also having regard to other relevant information received thereafter, the Bank is required

to maintain for 2017, on a consolidated basis, a phase-in Capital Adequacy Ratio of 12,75%, which includes:

• the minimum Pillar I own funds requirements of 8% in accordance with Article 92(1) of Regulation (EU)

No 575/2013 (of which up to 1,5% can be met with Additional Tier 1 Capital and up to 2% with Tier 2

Capital),

• an own funds Pillar II requirement of 3,5% required to be held in excess of the minimum own funds

requirement (to be made up entirely of CET 1 Capital),

• and a phased in combined buffer requirement which for 2017 includes the capital conservation buffer

(CCB) of 1,25% following the above law amendment, which have to be made up with CET 1 capital.

Additionally, applicable for Hellenic Bank, the combined buffer requirement includes:

• an O-SII buffer of 1% fully loaded and is phased in over a period of four years with application starting

from 1st of January 2019,

• a Counter-Cyclical Capital Buffer (CCyB) for which the CBC has set the level at 0% for 2016 and 2017

(the Institution specific CCyB for 2016 was 0%),

• Systemic Risk Buffer which has not been set to date.

Taking into account the phase-in legislation for CCB, the Group’s minimum CET1 and Tier 1 ratios effective

as from 1st January 2017 are set at 9,25% and 10,75% respectively.

In addition to the above, the ECB has set on a consolidated basis, a Pillar II capital guidance to be made up

entirely of CET 1 capital. The new minimum capital requirements were effective from 1st January 2017.

The Bank’s capital adequacy ratios for 30 June 2017 now take into account a revaluation reserve related to

unrealised gains from the Bank’s investment in sovereign bonds issued by the Republic of Cyprus, classified as

Available For Sale, as prudentially adjusted by the Bank for regulatory capital purposes. The said revaluation

reserve was not taken into account in the Bank’s estimation for its capital ratios for 30 June 2017 as announced

on 1st September 2017, due to the ongoing deliberations as to their classification as per IFRS9.


2. STRATEGIC TARGETS AND OUTLOOK

In delivering its strategic plans, Hellenic Bank remains committed to be a strong bank that meets the

expectations of the economy, society, investors and shareholders. During the course of the crisis, the Bank has

retained its reputation for stability and confidence and is now focusing on strengthening and improving its

market position.


reduction of the high level of NPEs. The “Build” aspect of the strategy relates to focused growth through new

lending and strengthening of customer relationships. The Bank intends to continue to carry out its role in

supporting the local economy while safeguarding its shareholders’ value through prudent policies and in line

with the Bank's target risk profile. At the same time, the Bank is continuing repositioning its International

Banking Division strategy reflecting the changing regulatory environment with specific focus on anti-money

laundering issues. The Bank’s strategy also includes advancements in technology, enhancement of the

customer service, as well as simplification of procedures and processes.

The Bank, advancing towards decisive actions to tackle its loan portfolio quality, disposed the operations of the

Arrears Management Division, to a newly established entity APS Debt Servicing Cyprus Ltd (“APS Cyprus”)

which is a member of the APS Holding a.s. (“APS Holding”) group of companies. The Bank will retain the

ownership of the portfolio of NPEs and the real estate assets which will be serviced by the new company upon

establishment. APS Cyprus is 51% owned by APS Holding and 49% by the Bank. The completion of the

transaction and the transfer of business was effected on 30 June 2017 while APS Cyprus commenced

operations on 3 July 2017.

The transaction is consistent with the Group’s strategy of tackling the asset quality problems of its portfolio and

to develop its activities within a prudent risk management framework. Furthermore, it is in line with the

European Central Bank, International Monetary Fund and European Bank for Reconstruction and Development

guidelines on the management of NPEs. Through the creation of the first debt servicing platform in the Cypriot

market, the Bank will be able to effectively tackle its NPEs in an accelerated way and with higher recoveries,

leveraging on the knowhow, proven expertise and technical experience of APS Holding. The Bank will also be

in a stronger position to focus its resources on managing and growing the performing loan portfolio by seizing

opportunities both domestically and internationally, as well as on continuing its digital transformation journey,

the optimization of corporate governance and the adaptation to the expanding compliance framework. The

establishment of a debt servicer is expected to facilitate the price discovery for problem loans and help the

development of a market for distressed assets in Cyprus, attracting international investor interest for such

assets and expediting the resolution of problem loans.

As part of implementing its strategic targets, the Bank continues its pivotal role in the recovery of the real

economy supporting creditworthy Cypriot businesses and households with a comprehensive range of quality

banking services. The Bank maintains sufficient liquidity which allows the exploitation of opportunities,

maintaining its focus on organic growth. The Bank estimates that there is potential and opportunities in various

sectors of the economy. The focus of new loans will be to companies that increase the competitiveness and

productivity of the country, such as in the sectors of retail and commercial activities, manufacturing, tourism and

shipping by targeting specific customer profiles. At the same time, loans to the retail sector will be geared

toward mortgages, small loans to new customers and supporting current clients who are deemed viable.

Through its focus on its “Fix” and “Build” initiatives, the Group has all the ingredients to continue the

implementation of its strategy. At the same time, the operating environment remains challenging and the Bank

will remain vigilant of developments to turn them into opportunities both in Cyprus and internationally.


3. APPENDIX 1

GROUP INCOME STATEMENT (€million) 6M-2017 6M-2016 ∆ YoY 2Q2017 1Q2017 ∆ QoQ

Interest income 85,3 93,5 -9% 42,0 43,3 -3%

Interest expense (19,0) (18,8) +1% (9,5) (9,5) -0%

Net interest income 66,3 74,7 -11% 32,6 33,8 -4%

Fee and commission income 24,6 27,7 -11% 12,4 12,2 +1%

Fee and commission expense (2,5) (2,4) +6% (1,1) (1,4) -19%

Net fee and commission income 22,1 25,3 -13% 11,3 10,8 +4%

Net gains on disposal and revaluation of foreign currencies and financial instruments

7,7 20,7 -63% 4,8 2,9 +70%

Other income 32,4 10,3 +216% 23,7 8,7 +174%

Total net income 128,5 131,0 -2% 72,4 56,1 +29%

Staff costs (43,4) (40,7) +7% (22,5) (20,9) +8%

Depreciation and amortisation (3,7) (2,8) +29% (1,8) (1,8) +1%

Administrative and other expenses (29,6) (28,7) +3% (13,3) (16,3) -19%

Total expenses (76,7) (72,3) +6% (37,6) (39,0) -4%

Profit from ordinary operations before impairment losses and provisions to cover credit risk

51,8 58,8 -12% 34,8 17,1 +104%

Impairment losses and provisions to cover credit risk (77,6) (48,8) +59% (50,3) (27,3) +84%

(Loss)/profit before taxation (25,8) 10,0 -358% (15,6) (10,2) +52%

Taxation 2,9 (8,9) -133% 2,8 0,2 +1.635%

(Loss)/profit for the period (22,9) 1,1 -2.173% (12,8) (10,1) +27%

Non-controlling interest (0,5) (0,4) +25% (0,1) (0,4) -85%

(Loss)/profit attributable to the shareholders of the parent company (23,4) 0,7 -3.417% (12,9) (10,5) +22%

Note: Numbers may not add up due to rounding


3. APPENDIX 1

GROUP STATEMENT OF FINANCIAL POSITION (€million) 30.06.2017 31.12.2016 ∆

Cash and balances with Central Banks 2.055 2.083 -1%

Placements with other banks 476 549 -13%

Loans and advances to customers 2.780 2.926 -5%

Debt securities 1.069 1.149 -7%

Equity securities and collective investment units 16 16 +2%

Investment in associate 7 0 +100%

Property, plant and equipment 100 100 +0%

Intangible assets 31 27 +16%

Tax receivable 0 0 -37%

Deferred tax asset 12 8 +38%

Other assets 209 179 +17%

Total assets 6.754 7.038 -4%

Deposits by banks 115 101 +14%

Customer deposits and other customer accounts 5.805 6.111 -5%

Tax payable 5 5 +0%

Deferred tax liability 2 2 +3%

Other liabilities 125 112 +11%

Loan capital 140 140 +0%

Share capital 99 99 0%

Reserves 460 464 -1%

Shareholder’s equity 559 563 -1%

Non-controlling interest 4 3 +14%

Total liabilities and equity 6.754 7.038 -4%

Contingent liabilities and commitments 821 855 -4%


Notes to the Group results for the six-month period ended 30 June 2017:

The Condensed Consolidated Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34 “Interim Financial Reporting” as adopted by the European Union and should be read in conjunction with the Audited Consolidated Financial Statements for the year ended 31 December 2016.

The Condensed Consolidated Financial Statements for the six-month period ended 30 June 2017 have not been audited by

the external auditors of the Group.

The Condensed Consolidated Financial Statements and the presentation of the financial results for the six-month period

ended 30 June 2017 have been posted on the Group’s website www.hellenicbank.com (Investor Relations).


4. APPENDIX 2

Glossary and Definitions

YoY: year on year

QoQ: quarter on quarter

FY: financial year

ECB: European Central Bank

CBC: Central Bank of Cyprus

EBA: European Banking Authority

SREP: Supervisory Review and Evaluation Process

RWAs: risk weighted assets

CCB: capital conservation buffer

O-SII: Other Systemically important institution

NPEs: On-Balance sheet non performing exposures

NPEs ratio: gross non-performing exposures (EBA definition) divided by gross loans

NPEs provision coverage ratio: accumulated impairment losses (individual and collective) divided by gross non-performing exposures

CET 1 ratio: Common Equity Tier 1 capital divided by Risk Weighted Assets

Leverage ratio: capital measure divided by the total on- and off- balance sheet items (Tier 1/total exposure measure)

Net Interest Margin ratio (NIM): net interest income divided by interest bearing assets, annualised

Cost to income ratio: total expenses over total net income

Cost of risk ratio: impairment losses on the value of loans and advances divided by gross loans, annualised

(Loss)/earnings per share: (loss)/profit divided by the number of shares issued

Return on Equity: profit attributable to shareholders of the parent company (annualized) divided by average equity attributable to

shareholders of the parent company

Net tangible book value per share: equity attributable to shareholders of the parent company less intangible assets divided by the number

of issued shares

1

Hellenic Bank: Building a stronger bank by focusing on our strategic priorities

Hellenic Bank’s primary objective continues to be to “fix” its balance sheet and to grow its franchise. Taking into account the ECB dialogue for SREP 2017, together with the Bank’s accelerated plans for resolving problem loans, and in the context of the IFRS, the Bank proceeded with certain amendments in the parameters and assumptions used in its provisioning methodology, resulting in an elevated provisioning charge for the second quarter of 2017. Due to the elevated provisions, the Group reported a loss after tax of €13 million for the quarter and a total loss of €22,9 million for 1H2017. Despite this loss, the Group continues to enjoy a strong capital position with a CET1 ratio of 13,88% and total capital adequacy ratio of 17,55%, significantly above minimum capital requirements. The Bank continued supporting creditworthy households and businesses with a comprehensive range of quality

banking services. About €185 million advances were approved during the first half of 2017, while €296 million of

restructurings were completed.

The Bank remains committed and is on the right track in implementing its main strategic priorities, namely the resolution of its asset quality problem and the prudent expansion of its business. Tackling NPEs Reduction of NPEs remains the number one priority of the Bank. In June 2017, we created the first debt servicing platform in Cyprus, through the sale of the non-performing loan and real estate management business to APS Cyprus which resulted in a net accounting gain of €19 million.

Non-performing exposures (NPEs) reduced for a 7th consecutive quarter

• €296 million of restructurings during 1H2017

• NPEs reduced by €150 million during 1H2017

NPEs provision coverage boosted to 60%

Profit before provisions of €51,8 million for 1H2017.

Financing the growth of Cyprus Economy: €185 million of new lending approved during 1H2017

Common Equity Tier 1 (CET 1) ratio at 13,88%, resulting in a total capital adequacy ratio of 17,55%, well above the

minimum regulatory requirement

Partnership with APS Cyprus aims to reduce NPEs in an accelerated way and with higher recoveries. No tolerance

for strategic defaulters and non-cooperative clients

2

The level of NPEs has been reduced for a seventh consecutive quarter to €2.354 million at 30th June 2017, down by 6% compared to the €2.504 million at 31st December 2016. The NPEs to gross loans ratio was reduced to 56,0%, down from 58,2% at 31st December 2016. NPEs provision coverage ratio stood at 60% as at 30th June 2017 up from 55% at the end of 2016, while the overall

coverage taking into account tangible collaterals totaling 115%. Increased provisions in 2Q2017 further strengthen

the Group’s ability to accelerate its plans for balance sheet de-risking and deleveraging.

An amount of €296 million relating to total customers’ exposures, was restructured during 6M2017, while an amount

of €82 million was written off as part of the whole restructuring process.

Strong Capital Position Despite the current period losses primarily due to provisions, the Group maintains robust capital adequacy ratios, above the minimum required by the relevant Regulatory Authorities. As at 30 June 2017, the Common Equity Tier 1 (CET 1) ratio stood at 13,88%, compared to the minimum required CET 1 ratio of 9,25% and the Capital Adequacy Ratio was 17,55%, compared to a minimum required of 12,75%. Deposits and Loans The Group maintained its strong liquidity position. The net loan to deposits ratio was 48% as at 30 June 2017, enabling further business expansion. At 30 June 2017, total deposits amounted to €5,8 billion while total gross loans reached €4,2 billion. The Bank’s loan market share as at 30 June 2017 was 7,7% and its deposits market share was 12,1%. Way forward for the remainder of 2017


resolution of NPEs, whilst the “Build” aspect relates to focused growth through the expansion of the Bank’s

franchise. The Bank continues to support the local economy while safeguarding its shareholders’ value through

prudent policies and in line with the Bank's target risk profile.

Aiming to decisive actions to tackle its loan portfolio quality, the Bank sold its operations of the Arrears Management

Division, to a newly established entity APS Debt Servicing Cyprus Ltd, member of the APS Holding a.s. The Bank

retains the ownership of the portfolio of NPEs and the real estate assets which are serviced by the new company.

Through the creation of the first debt servicing platform in the Cypriot market, the Bank will be able to effectively

tackle its NPEs in an accelerated way and with higher recoveries. The Bank will also be in a stronger position to

focus its resources on managing and growing the performing loan portfolio by seizing opportunities both

domestically and internationally, as well as on continuing its digital transformation journey, the optimization of

corporate governance and the adaptation to the expanding compliance framework.

The Bank continues its pivotal role in the recovery of the real economy supporting creditworthy Cypriot businesses

and households with a comprehensive range of quality banking services. The Bank maintains sufficient liquidity

which allows the exploitation of opportunities, maintaining its focus on organic growth. The focus of new loans will

be to companies that increase the competitiveness and productivity of the country, such as in the sectors of retail

and commercial activities, manufacturing, tourism and shipping by targeting specific customer profiles. At the same

time, loans to the retail sector will be geared toward mortgages, small loans to new customers and supporting

current clients who are deemed viable.

With an NPE provision coverage at 60%, total capital adequacy ratio of 17,55% and the operation of the

first platform for NPE management, the Bank is in a position to fulfil its strategic priorities.

3

29th September 2017

Statement by Yannis Matsis Chief Executive Officer: “We achieved further progress in executing our strategic priorities during the second quarter of 2017. We reduced

NPEs for a seventh consecutive quarter and maintained strong momentum by completing about €122 million of

loan restructurings. Taking into account the ECB dialogue for SREP 2017 together with the Bank’s accelerated

plans for resolving problem loans, and in the context of the International Financial Reporting Standards, we

proceeded with certain amendments in the parameters and assumptions used in our provisioning methodology,

resulting in an elevated provisioning charge for the second quarter of 2017. This resulted in an improved

provisioning coverage of NPEs to more than 60%.

Resolving our problem loans is paramount and we continue to explore all available options to decisively reduce

them. In June 2017, we proceeded with the creation of the first debt servicing platform in Cyprus, through the sale

of the non-performing loan and real estate management business to APS Cyprus which resulted in a net accounting

gain of €19 million. Through this platform, we will be able to effectively tackle our NPEs in an accelerated way and

with higher recoveries, leveraging on the knowhow, proven expertise and technical experience of APS Holding a.s.

Furthermore, the establishment of an independent debt servicer is expected to facilitate the price discovery for

problem loans and help the development of a market for distressed assets in Cyprus.

Due to the elevated provisions, the Group reported a loss after tax of €13 million for the quarter and a total loss of

€23 million for the six-month period. Despite this loss, the Group’s capital position remains strong. The Group’s

capital adequacy ratio totaled 17,55% at the end of June 2017, comfortably above the minimum regulatory

requirements.

The Bank continues to support creditworthy households and businesses with a comprehensive range of quality

banking services. About €185 million advances were approved during the first half of 2017, reflecting the increased

new lending momentum compared to a year earlier.”

1

Group Financial Results for the six months ended 30 June 2017

28 September 2017

2© Hellenic Bank Public Co Ltd

All rights reserved

Highlights – 1H17 Group financial results

•90 dpd1) reduced by 12% y-o-y to €1.887 m; 90dpd ratio at 44,9%, compared to 48,6% a year earlier

•NPEs2) reduced for the 7th consecutive quarter; NPEs ratio at 56,0% down from a peak of 61,2%

•NPEs provision coverage boosted to 60%3), with overall NPEs coverage at 115%4)

•Elevated impairment losses and provisions for 2Q17 taking into account the ECB dialogue for SREP 2017

Asset quality

•Creation of first debt servicing platform enables the Bank to effectively tackle its NPLs and to be in a stronger position to focus its resources on managing and growing the performing loan portfolio

•Platform facilitates the development of a distressed assets market and the price discovery for distressed assetsAPS Cyprus

•Ample liquidity reflecting a solid deposit franchise

•Low ratio of loans to deposits of 48% enables business expansion

•Deposit funded, with deposits accounting for 86% of total assets

Liquidity and funding structure

•Balance sheet strengthening and de-risking initiatives negatively affect profitability through pressured interest income, reduced fee and commission income and elevated provisions

•A highly liquid, underleveraged balance sheet and current ECB monetary policy depress NIM5)

•Profit before provisions of €51,8 m and loss after tax of €22,9 m, due to elevated impairment losses

Performance

•Capital ratios significantly above minimum capital requirements

•CET1 ratio (trans.) of 13,88 and 13,63% on a fully loaded basis

•Total capital adequacy ratio (trans.) of 17,55% and 17,40% on a fully loaded basis Capital strength

•2nd largest commercial bank with deposit and loans market shares of 12% and 8%, respectively

•High lending momentum; €185 m of loans approved during 1H17

•Cypriot economy expanded by 3,6% y-o-y for 1H17, on the back of a broad based recovery

Systemic bank in a growing economy

1) For a list of definitions and abbreviations, please refer to Glossary in slides 45-462) As per EBA definition, please refer to Glossary in slides 45-46 3) Individual and collective impairment losses4) Taking into account tangible collateral, based on open market values (capped at client exposure)5) Annualised YTD


All rights reserved

Key indicatorsPerformance across key indicators

0,4

-10,1-12,8

2Q16 1Q17 2Q17

36,0

17,1

34,8

2Q16 1Q17 2Q17

Profit/(Loss) for the period

(€ m)

Profit before provisions

(€ m)

NPEs (€ m) and 90dpd (€ m) Provision coverage Capital ratios (FL)2)

2,01%

2,15%

2,02%

FY15 FY16 1H17

59% 58% 60%

FY15 FY16 1H17

NIM Cost to income ratio

2.602

2.504

2.354

2.181

1.9741.887

Dec-15 Dec-16 Jun-17

NPEs 90dpd

50%

55%

60%

54%

61%

66%


NPEs provision coverage

90dpd provision coverage

New lending1) and Loans market share

1) Approved facilities2) On a Fully Loaded basis

63

152185

6,9%7,9% 7,7%

1H15 1H16 1H17

New lending (€ m, ytd)

Loans market share

13,5% 13,5% 13,6%

16,8% 16,9% 17,3%

9,25%

10,75%


CET1 ratio Tier 1 ratio

SREP CET1 SREP T1


All rights reserved

Evolution of key indicators- Pillars of strategy

Rationale

Key indicators

“Fix” strategy

“Build” strategy

Pillars of strategy


NIM (annualized ytd) 2,01% 2,15% 2,02%

Cost to income ratio (ytd) 59% 58% 60%

Cost of risk (annualized ytd) 2,3% 2,8% 3,8%

Earnings/(Loss) per share (€

cent)6,4 (32,0) (11,8)

Loans to deposits ratio 50% 48% 48%

NPEs % gross loans 59% 58% 56%

NPEs provision coverage 50% 55% 60%

CET1 ratio (FL) 13,5% 13,5% 13,6%

Tier 1 ratio (FL) 16,8% 16,9% 17,3%

Leverage ratio 9,1% 8,8% 8,6%

• NPLs reduction using a toolset of sustainable solutions, suchas debt to asset swaps, balance reductions, maturityextensions, grace periods and instalment reductions

• By creating the first debt servicing platform in Cyprus throughthe sale of its NPL and real estate management business toAPS Cyprus, the Bank will be able to effectively tackle itsNPLs in an accelerated way and with higher recoveries,leveraging on the knowhow, proven expertise and technicalexperience of APS Holding

• The Bank is in a stronger to focus its resources on managingand growing the performing loan portfolio by seizingopportunities both domestically and internationally

• The establishment of a debt servicer is expected to facilitatethe price discovery for problematic loans and help thedevelopment of a market for distressed assets in Cyprus,attracting international investor interest for such assets andexpediting the resolution of problem loans

• Growth of the loan portfolio, strengthening customer

relationships

• Advancements in technology

• Enhancement of customer service

• Simplification of procedures and processes


All rights reserved

[€ m] 1H17 1H16 y-o-y 2Q17 1Q17 q-o-q

Net interest income 66,3 74,7 (11%) 32,6 33,8 (4%)

Net fee and commission income 22,1 25,3 (13%) 11,3 10,8 4%

Other income 40,1 31,0 29% 28,6 11,5 148%

Total net income 128,5 131,0 (2%) 72,4 56,1 29%

Staff costs (43,4) (40,7) 7% (22,5) (20,9) 8%

Administrative and other expenses (33,3) (31,6) 5% (15,1) (18,1) (17%)

Total expenses (76,7) (72,3) 6% (37,6) (39,0) (4%)

Pre-provision income 51,8 58,8 (12%) 34,8 17,1 104%

Impairment losses and provisions (77,6) (48,8) 59% (50,3) (27,3) (84%)

(Loss)/profit before taxation (25,8) 10,0 -- (15,6) (10,2) 52%

Taxation 2,9 (8,9) -- 2,8 0,2 --

(Loss)/profit after tax (22,9) 1,1 -- (12,8) (10,1) 27%

Cost to income ratio (%) 60 55 +5p.p. 52 70 -18p.p.

Return on Equity (%) (8,3) 0,2 (8,5p.p) (9,2) (7,5) -1,7p.p.

1H17 Total net income of €128,5 m, down by 2% y-o-y, due to:

• lower interest income as income recognised on impaired loans is

declining reflecting lower effective interest rates and declining

impaired loans volume,

• lower fee and commission income from reduced fees in the

international business division, and

• higher other income due to the €19 m gain relating to the APS

transaction

1H17 Total expenses of €76,7 m, up by 6% y-o-y, due to higher

personnel expenses (up by 7% y-o-y) relating to the increase in the

number of employees and the impact from the renewal of the

collective agreement in June 2017, effective from 1 January 2017

1H17 Impairment losses and provisions1) of €77,6 due to elevated

impairment losses for 2Q17 following certain amendments to the

parameters and assumptions for estimating the recoverable amount

of property collateral values used in the Bank’s provisioning

methodology (relating primarily to the elimination of forward looking

indexation in collateral prices and the adoption of higher liquidation

discounts at the point of sale). The amendments were made in the

context of the IFRS and take into account the Bank’s accelerated

plans for resolving problem loans, latest market developments and

the ongoing ECB engagement as part of the 2017 SREP

1H17 Loss after tax of €22,9 m primarily due to the elevated

impairment losses and provisions

Income Statement highlights

1

2

4

1H17 Highlights

1) Includes Impairment losses on the value of loans and advances and Provisions to cover credit risk for contractual

commitments and guarantees. Note: Numbers may not add up due to rounding

1

2

3

4

3


All rights reserved

15,8 15,3 14,5 13,1 12,7 11,1

31,1 31,3 30,8 33,3 30,6 30,9

-9,2 -9,6 -9,3 -9,7 -9,5 -9,5

46,9 46,6 45,3 46,443,3 42,0

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Interest Income

Other interest Income

Impaired loans interest Income

Interest expense

27,9

34,937,1 37,7 37,0 36,0 36,8

33,8 32,6

2,01% 1,98% 2,01%

2,14% 2,15%2,14%

2,15%

2,03% 2,02%

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

NII (Q basis; € m) NIM (ytd)

NII driven by lower interest income and reflects a highly liquid, underleveraged balance sheet and current ECB monetary policy

Components of NIIEvolution of NII and NIM

• Net interest income (NII) of €32,6 m for 2Q17, down by 4% q-o-q,

mainly due to a 3% reduction in interest income

• NIM of 2,02%, compared to 2,15% for FY16; Low NIM reflects a

highly liquid balance sheet (with net loans accounting for 41% of

total assets compared to an average of 66% for Cypriot banks and

61% for EU banks as per EBA Risk Dashboard Q1 2017) and an

ECB placement of €1,9 b (about 28% of total assets) at a negative

rate of 40bps

• Interest income of €42,0 m, compared to €43,3 m for 1Q17, due to

a €1,6 m reduction on interest recognized on impaired loans,

reflecting a lower effective interest rates and lower volume of

impaired loans

5,5% 5,4% 5,4% 5,3% 5,2% 5,2% 5,1% 5,0%

0,6% 0,5% 0,4% 0,4% 0,4% 0,4% 0,5% 0,4%

4,9% 5,0% 4,9% 4,9% 4,8% 4,7% 4,7% 4,6%

Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Gross Loans Gross Deposits Net Client spread

Average contractual interest rates

FY15: €145 m FY16: €147 m


All rights reserved

13,57,8 10,2 9,0 8,0 7,2 10,0 11,5 9,6

16,714,0

19,013,5

7,8

26,9

9,0

22,0

7,210,0

11,5

28,6

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

13,8 14,616,2

13,0 12,3 11,914,8

10,8 11,3

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Non-interest income driven by reduced fee income in international business division

Net fee and commission income

Other

income

∑ Total net income

Breakdown of non-interest income (€ m)

• 2Q17 Net fee and commission income of €11,3 m,

up by 4% q-o-q, reflecting increased business

volumes

• Fee and commission income remain lower than

average due to reduced fees in the international

business division

• 2Q17 Other income of €28,6 m, including a net

gain of €19,0 m from the sale of the Bank’s non-

performing loan and real estate management

business to APS Debt Servicing Cyprus Ltd (“APS

Cyprus”), creating the first debt servicing company

in Cyprus

• 1Q17 Other income of €11,5 m included a €2,1 m

gain from the disposal of the investment in Anolia

Holdings Ltd, which owned property acquired in

satisfaction of debt

• 2Q16 Other income included a €14,0 m profit from

the sale of Visa Europe investment

Average of €13 m

Average of €9 m

(adjusted)

FY15: €58 m FY16: €52 m

CGD

Visa

FY15: €53 m FY16: €48 m

∑ Total non-interest income

APS Transaction

Relative to total

net income25% 26% 20% 22% 17% 22% 24% 19% 16%

24% 14% 34% 15% 31% 13% 16%Relative to total

net income21% 39%

27,3 22,4 43,1 22,0 34,3 19,1 24,8 22,3 39,8

55,3 57,3 80,2 59,7 71,3 55,1 61,6 56,1 72,4


All rights reserved

• Total expenses of €37,6 m, down by 4% q-o-q, due to lower

advisory costs and due to the €2 m charge for the Single

Resolution Fund (SRF) contribution booked in 1Q17

• Staff costs of €22,5 m, up by 8% q-o-q, primarily due to the

recently signed collective agreement, effective 1 January 2017

• Cost to income ratio of 60% for 1H17, compared to 58% for FY16

(average of 64% for EU banks as per EBA Risk Dashboard Q1

2017). 1H17 cost to income ratio positively affected by the €19,0 m

gain from the APS transaction

High cost to income ratio reflecting a low NIM

Total expenses evolution (€ m)


Cost to income ratio (%)

19,7 19,4 20,5 20,4 20,6 20,1 20,5 20,8 20,9 22,5

21,7

16,016,8 17,5 16,4

15,2 15,0 15,9 16,115,1

2,0

41,4

35,537,3 37,9 37,0

35,3 35,536,7

39,037,6

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

SRF Contribution

Administrative and other expenses (incl. depreciation)

Staff costs

65% 65% 65% 59% 62% 55% 58% 58% 70% 60%

65% 64% 65%

47%

62%

49%

64%60%

70%

52%

Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Cumulative Quarterly

FY15: €152 m FY16: €144 m


All rights reserved

Highlights of income statement

71,3

-35,3

36,0

-27,2

-8,5

0,4

55,1

-35,5

19,6

-15,4

-0,4

3,9

61,6

-36,7

24,9

-51,1

-41,4

-67,6

56,1

-39,0

17,1

-27,3

0,2

-10,1

72,4

-37,6

34,8

-50,3

2,8

-12,8

Total net income Total expenses Profit before provisions Impairment losses andprovisions

Taxation Profit/(loss) after tax

2Q16 3Q16 4Q16 1Q17 2Q17

Income Statement trends (€ m)

• 2Q17 Loss after tax of €12,8 m, compared to a profit after tax of

€0,4 m for 2Q16 and a loss after tax of €10,1 m for 1Q17

• 2Q17 Loss primarily due to elevated impairment losses and

provisions to cover credit risk of €50,3 m reflecting the

amendments to the parameters and assumptions for estimating the

recoverable amount of property collateral values

• 1H17 Profit before provisions of €51,8 m, positively benefiting from

the €19,0 m gain from the APS transaction

• 1H17 Loss after tax of €22,9 m due to elevated impairment losses

and provisions to cover credit risk

Profit before provisions (€ m) Profit/(Loss) after tax (€ m)

58,851,8

1H16 1H17

1,1

-22,9

1H16 1H17


All rights reserved

358247

1.085563

476

140

2.055

5.805

2.780

1 2

Well-funded balance sheet with high liquidity surplus

Balance sheet structure as at 30 June 2017 (€ m)

1) Convertible Capital Securities2) Prime-1 short term rating by Moody’sNote: Numbers may not add up due to rounding

Customer

deposits

Ratio of loans

to deposits at

48%; Deposits

exceeding

loans by

€3.025 m

Due to Banks &

other Liabilities

Equity

Loan capital

6.754 6.754

Cash and balances with

Central Banks

Net loans

Bank placements

Debt/Equity securities

Fixed, intangible and other assets

2

3

1

2

3

Liabilities Assets

€130 m of CCSs1) constitute additional loss absorbing

buffer and are treated as Additional Tier 1 capital

Deployment of liquidity in interest bearing assets

Most foreign currency placements with banks rated P-12)

€1,9 b with the ECB at -40bps

1

4

4


All rights reserved

Strong liquidity position with excess customer deposits

Customer deposits (€ b)

1) Source system data: CBCNumbers may not add up due to rounding

Deposit market share (%)

Stable funding structure

3,38 3,58 3,48 3,69 3,65 3,70 3,69 3,73

2,142,77 2,66 2,37 2,34 2,41 2,32 2,08

5,51

6,35 6,14 6,06 5,99 6,11 6,01 5,81

Dec-13 Dec-14 Dec-15 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Non-IBU deposits IBU deposits

48%48%48%50%51%51%50%51%

86%87%87%86%85%82%83%84%

Jun-17Mar-17Dec-16Sep-16Jun-16Mar-16Dec-15Dec-14

Net loans % Customer deposits Customer deposits % Total assets

• Deposit trends reflect the Bank’s strategy to maintain a low deposit

cost taking into account its strong liquidity position; The deposit split

among the Group’s main business lines is: Retail banking accounts

for about 49% of total deposits, business banking for about 5%,

corporate banking for about 6%, IBU deposits for about 36%

• A stable funding structure, with a loans to deposits ratio of 48%

(compared to an average of 80% for Cypriot banks and an average

of 123% for EU banks as per EBA Risk Dashboard Q1 2017) and

with deposits funding about 86% of total balance sheet; Low ratio of

loans to deposits enables business expansion

• Deposit market share of 12,1% at June 2017 or 1,6x the Bank’s

loans market share, indicating potential for business expansion

1)

10,2%11,8%

13,8% 13,4%

12,6%12,1%

13,2%

12,3%

15,2%14,5%

12,0% 11,4%12,5%

14,9%

18,7% 18,5%17,3%

16,6%

7,9%

10,6%

11,8% 11,5% 11,2% 10,9%

Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Jun-17

Total Other Financial Intermediaries

Non-financial corporations Households


All rights reserved

1.073 1.094 1.122 1.131

1.202 1.254 1.289 1.281

1.934 1.688 1.604 1.517

187265 283 274

4.396 4.300 4.298 4.203

7,0%7,4% 7,6% 7,7%

Dec-15 Dec-16 Mar-17 Jun-17

Retail Business Corporate Other Loans market share

81

177

257

400

Other

Business

Retail

Corporate

1363

197

377

84

152

240

354

89

185

3M 6M 9M 12M

2015 2016 2017

High lending momentum mitigates pressure from loan repayments, customer deleverage and loan restructuring activity

New lending3) (€ m)

Total 2015-2017: €916 m


New lending3) (€ m)Gross loans composition (€ m)

• Gross loans were down by 2% q-o-q and totaled €4.203 m at 30

June 2017; Reduction in gross loans driven by loan repayments,

customer deleverage and increased restructuring activity including

debt to asset swaps (D2As) and write offs

• New lending of €185 m during 1H17; Total new lending of €916 m

post 31 December 2014, as part of the Bank’s “Build” strategy

• Lending to businesses (Corporate and Business) accounted for

€577 m (63%) of total new lending post 31 December 2014

1) 2)

Category

1) Other includes: International, In.Corp. & Inv and Other2) Source for system data: CBC3) Approved facilities


All rights reserved

2.181 2.1802.139

2.091

1.9741.910 1.887

49,6% 49,6% 48,6% 48,4%

45,9%44,4% 44,9%

Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

90dpd (€ m) 90dpd ratio

-12%

538 545 550 548 566 563

771 799 823 812 821 814

1.314 1.197 1.136 1.017 963 879

60 61 64 127 108 98

2.683 2.602 2.573 2.504 2.458 2.354

Sep-15 Dec-15 Jun-16 Dec-16 Mar-17 Jun-17

Retail Business Corporate Other

Steady improvement in asset qualitySeven consecutive quarters of NPE reduction

• 90dpd reduced by 12% y-o-y to €1.887 m, with the 90dpd ratio

reduced to 44,9% down from 48,6% a year earlier

• NPEs reduced by 9% y-o-y to €2.354 m at 30 June 2017

compared to €2.573 at 30 June 2016; NPEs ratio at 56,0%

compared to 58,5% a year earlier

• The majority of NPEs reduction experienced in Corporate NPEs,

which were reduced by 33% since peak

NPEs and NPE ratio evolution

2.6832.602 2.580 2.573

2.523 2.5042.458

2.354

61,2%

59,2% 58,7% 58,5% 58,4% 58,2%57,2%

56,0%

Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

NPEs (€ m) NPEs ratio

90dpd1)

NPEs by segment2) (€ m)

1) For a list of definitions and abbreviations, please refer to Glossary to slides 46-472) Classification based on internal operational segmentation (business line)3) Other includes: International, International Corporates and Investments and Other

3)

-9%


All rights reserved

6,4% 1,3% 2,1% 1,8% 2,3% 2,3% 2,4% 2,1% 2,8% 2,6% 3,8%

2,1%

1,3%

2,9%

1,2%

3,9%

2,3% 2,4%

1,4%

5,2%

2,6%

4,9%

12M14 3M15 6M15 9M15 12M15 3M16 6M16 9M16 12M16 3M17 6M17

Cost of risk (ytd) Cost of risk (quarterly)

Improved provision coverage for problem loans

Accumulated provisions for impairments Provisions for impairments1) and provision coverage

Cost of risk (%)

812 830

1.184

1.3031.374 1.395 1.423

14,6% 18,9%

26,9%29,6% 32,0% 32,4% 33,9%

Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Mar-17 Jun-17

Accumulated provisions (€ m) Accumulated provisions % gross loans

22,914,4

31,1

13,0

42,9

25,3 26,415,0

55,6

27,4

51,646% 47% 46% 46%

50% 50%52% 53%

55% 57%60%

54% 54%56% 56%

61%63%

66%

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Impairment losses (€ m) NPEs provision coverage 90dpd provision coverage

• Accumulated provisions of €1,4 b at Jun-17, about 34% of gross loans

• 2Q17 impairment losses1) of €51,6 m, up by 88% q-o-q, following the

amendments to the parameters and assumptions for estimating the

recoverable amount of property collateral values (primarily due to the

elimination of forward looking indexation and the adoption of higher

liquidation discounts at the point of sale). Changes were made in the

context of the IFRS, taking into account the Bank’s accelerated plans

for resolving problem loans, latest market developments and the

ongoing ECB regulatory engagement for the 2017 SREP

• NPEs provision coverage ratio improved to a high 60% at Jun-17;

90dpd provision coverage ratio increased to a high 66% at Jun-17

• 2Q17 Cost of risk of 4,9%, compared to 2,8% for FY16

Average

of €30 m

1) Impairment losses on the value of loans and advances


All rights reserved

Provisions and collateral coverage2) (%) of NPEs

High overall coverage on all NPE segments

Retail Business Corporate Other1)

NPEs (%) of gross loans

Gross loans (€ m)

1.088 1.091 1.094 1.122 1.131 1.245 1.227 1.254 1.289 1.2811.880 1.737 1.688 1.604 1.517

184 268 265 283 274

58,5% 58,4% 58,2% 57,2% 56,0% 50,6% 50,5% 50,1% 50,4% 49,8%66,1% 65,4% 64,7% 63,7% 63,5% 60,4% 62,1% 60,3% 60,1% 58,0%

34,7% 33,8% 47,9% 38,0% 35,7%

51,9% 52,5% 54,9% 56,7% 60,5%

62,1% 60,8% 58,3% 56,6% 55,1%

114,0% 113,3% 113,2% 113,3% 115,5%

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-1

7

Jun

-17

58,4% 58,5% 60,7% 62,3% 65,8%54,8% 55,6% 58,2% 60,3% 64,0%

43,6% 44,3% 47,8% 49,6% 53,2% 62,8% 56,1%44,1% 37,0% 40,0%

48,6% 47,3% 46,4% 44,4% 43,6% 57,5% 56,3% 54,6% 52,3% 50,8%72,6% 70,8% 68,6% 67,0% 65,1% 41,9% 56,9%

48,3% 56,2%66,0%

107,0%105,8%107,1% 106,8% 109,4% 112,3% 111,9% 112,8% 112,7% 114,8% 116,2% 115,1% 116,4% 116,7% 118,3%

104,7%113,0%

92,4% 93,3%106,0%

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-1

7

Jun

-17

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-1

7

Jun

-17

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-1

7

Jun

-17

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-1

7

Jun

-17

Provisions coverage Collateral coverage

4.397 4.323 4.300 4.2984.203

1) “Other” includes International, International Corporates and Investments and Other2) Based on open market values (capped at client exposure)Classification based on internal operational segmentation (business line)Provision ratio for total NPEs include individual and collective impairment losses while provision ratios by business line/segment do not take into account collective provisionsNumbers may not add up due to rounding


All rights reserved

47

89

203

125102

167142

200174

122

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Loan restructurings (€ m)1)

Loan restructuring activity remains high

FY15: €464 m FY16: €612 m

• Total restructurings (account basis) of €296 m during 1H17,

compared to €269 m for 1H16

• At 30 June 2017, on average 87% of loans restructured post 31

December 2014 were in arrears less than 90dpd

Average of €137 m

Performance of loan restructurings2)

Account basis

1) In line with EBA definition (please refer to slide 46). Includes debt to asset settlements and write-offs.

2) Refers to restructurings implemented post 31 December 2014 and excludes debt to asset settlements and write-offs.

Loans restructured during 1Q17 are not shown as it is too early to assess their performance. Average ratio relates to

weighted average

Numbers may not add up due to rounding

86%

72%

96%

89%

99%

77%

86%

97%

70% 70% 85% 80% 88% 92% 88% 94%

83%

72%

95%

86%

94%

79%

86%

97%

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

Corporates Households Total


All rights reserved

Creation of first independent debt servicing company to drive NPLs resolution

APS RecoveryCyprus Ltd

51%

Hellenic Bank Public Company

Ltd

49%

APS Debt Servicing Cyprus Ltd

APS related transactions

• In June 2017, the Bank sold its NPL and real estate management

business to APS Debt Servicing Cyprus Ltd (“APS Cyprus”),

creating the first debt servicing company in Cyprus

• APS Cyprus is 51% owned by APS Holding a.s. and 49% by the

Bank. APS Holding is a specialized debt servicing company

covering 11 European countries in Central and South Eastern

Europe

• APS Cyprus acquired the operations of the Bank’s internal Arrears

Management Division, including the necessary resources to

independently carry out the servicing of non-performing loans and

real estate assets. A 10-year service level agreement with APS

Cyprus for managing the Bank’s NPLs (€2,3 b) and real estate

portfolio (€150 m), with both portfolios retained by the Bank

• The Bank will be able to effectively tackle its problems loans in an

accelerated way and with higher recoveries, leveraging on the

knowhow, proven expertise and technical experience of APS

Holding. It will also be in a stronger position to focus its resources

on managing and growing the performing loan book by seizing

opportunities both domestically and internationally

• Expected to facilitate the price discovery for problematic loans and

help the development of a market for distressed assets in Cyprus,

attracting international investor interest for such assets and

expediting the resolution of problem loans

• The business was sold for approximately €20,6 m and there was a

net gain of approximately €19,0 m

APS added to the administration the second largest loan portfolio sold in the Czech Republic with value exceeding €23m (2016)

Acquisition of a portfolio of NPLs which includes secured and unsecured corporate and SME loans with nominal value of €1,1bn from a major international bank in Romania (2016)

Acquisition of a portfolio of NPLs which includes secured and unsecured corporate and retail loans with nominal value €261m from Intesa Sanpaolo Bank Romania (2016)

APS and Hrvatska Postanska Bank (Croatia) have signed Memorandum of Understanding to conclude a portfolio sale and purchase a portfolio of non-performing corporate loans (2016)

UniCredit Bank Hungary sold a non-performing credit portfolio of mortgages amounting to €139 m, to funds managed by Balbec Capital LP and APS Holding


All rights reserved

Movement of property stock (€ m)

73

116,5 118 118 106 105140

47

(4) 2 28(41) 35

(0)

Se

p-1

6

Ad

ditio

ns

Dis

posals

Oth

er

Dec-1

6

Ad

ditio

ns

Dis

posals

Ma

r-17

Ad

ditio

ns

Dis

posals

Jun

-17

68%

45% 52%

25%

45% 36%

7% 10% 12%

Dec-16 Mar-17 Jun-17

Land Commercial Residential

Real Estate by type of property (in terms of value)

1) Includes reversal of impairmentNumbers may not add up due to rounding

Number of properties by type

72131

254

13

27

27

47

57

73

132

215

354

Dec-16 Mar-17 Jun-17Land Commercial Residential

1)

Properties managed by Property Management Unit

• On-boarded assets at 30 June 2017 amounted to 354 properties worth of €140 m, (classified as properties held for sale) mostly from customer debt settlements

• 52% of the on-boarded assets in terms of value relates to Land


All rights reserved

3.974 4.036 3.958 4.106 4.017 3.913 3.744 3.671 3.497

7,9% 8,1%8,6% 8,5%

9,0% 9,2%8,7% 8,7% 8,8%

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Risk weighted assets Leverage ratio

13,71% 13,88%13,63%

0,99%(1,37%)

0,06% (0,16%)0,66%

(0,25%)

CET1 ratioMar-17(trans)

Profitbefore

provisions

Provisions OCI & otheradj.

DTA & IA&Trans. adj

RWAschange

CET1 ratioJun-17(trans)

DTA & IA(FL)

CET1 ratioJun-17 (FL)

13,18%13,60% 13,80% 13,71% 13,88% 13,63%

16,41%16,91% 17,00% 17,10%

17,40% 17,34%

16,52%

17,00% 17,20% 17,20%17,55% 17,40%

Jun-15(trans.)

Sep-16(trans.)

Dec-16(trans.)

Mar-17(trans.)

Jun-17(trans.)

Jun-17 FL

CET1 ratio Tier 1 ratio Total Capital ratio

Strong capital ratios well above regulatory requirements

Leverage Ratio1)

57%53% 54% 56% 56%RWA

/Total

assets

53%

CET1 ratio evolution

Capital ratios

2)

53%

• CET1 ratio (trans.) totalled 13,88% at 30 June 2017. Adjusting for

IA and DTA, CET1 ratio (FL) totaled 13,63%

• €130 m of CCSs constitute additional loss absorbing buffer and are

considered as Additional Tier 1 capital; Tier 1 ratio (trans.) totaled

17,40% at 30 June 2017

• Capital ratios are comfortably above minimum regulatory

requirements

1)

52%

1) Basel regulation, CRR / CRD IV, Fully Loaded2) Other comprehensive income (OCI) Numbers may not add up due to rounding

53%


All rights reserved

Minimum regulatory capital requirements

Rationale

13,63%

9,25%

17,34%

10,75%

17,40%

12,75%

Jun-17 2017 requirement

CET1 ratio Tier 1 ratio Total Capital ratio

4,38%

6,59%

4,65%

Prudential requirements decision1) -

Capital ratios

4,50% 4,50%

1,50%

2,00%3,50%

3,50%1,25%

1,25%

9,25%

12,75%

CET1 Requirement OCR

CCB

P2R

Tier 2

AT1

P1

As per 2016 SREP (applicable from 1 January 2017), the Group is

required to maintain an OCR of 12,75%, on a transitional basis, which

includes:

• minimum Pillar 1 own funds requirements of 8% (up to 1,5% can be

met with AT1 Capital and up to 2% with Tier 2 Capital),

• an own funds requirement of 3,5% for P2R in excess of the minimum

own funds requirement (to be made up entirely of CET1 Capital),

• and the combined buffer requirement which currently includes the

capital conservation buffer (CCB)

As such, the Group’s minimum required CET1 and Tier 1 ratios are set

at 9,25% and 10,75% respectively for 2017

In addition to the above requirements, the ECB has set on a

consolidated basis a P2 guidance in the form of CET 1 capital, effective

as from 1 January 2017

Total P1

requirement

of 8%

Recent legislation

change relating to

CCB

In February 2017, the Cypriot Parliament voted for an amendment to

the Business of Credit Institutions Law allowing the gradual phase-in of

the CCB, starting 2016

• Accordingly, the CCB for 2016 was set at 0,625%, for 2017 at

1,25%, for 2018 at 1,875% and for 2019 at 2,5%

1) The Bank must maintain an Other Systemically important institution buffer (O-SII) of 1,0% of its total risk exposure amount on 1 January 2022 on an individual and consolidated basis starting from 1 January 2019 at 0,25% and increasing by 0,25% every year until fully implemented. The CBC has set the counter-cyclical capital buffer at 0% for 2016 and for the 1st Half of 2017.

Capital cushion


All rights reserved

Gradual abolition of prudential liquidity framework by CBC Full abolition effective 1 January 2019

Central Bank of Cyprus

Liquidity Ratios

Regulatory

Minimum

HB position at

Jun-17

HB range for

2Q17

HB average

for 2Q17

Liquidity Mismatch Ratio

0-7 days (€)-10% -5,4%

-6,7% to

-2,8%-4,9%

Liquidity Mismatch Ratio

0-30 days (€)-25% -14,7%

-15,8% to

-10,6%-13,1%

Liquid Assets Ratio (€) 20% 47,0%44,5% to

48,6%46,5%

Liquid Assets Ratio (non

€)70% 84,9%

79,4% to

87,5%83,4%

FC Liquid Assets Ratio

for FC Deposits <7 days100% 100,09%

100% to

100,09%100,02%

BASEL III

REGULATIONS

Regulatory

Minimium

HB position at

Jun-17SUMMARISED FRAMEWORK Implementation Dates

LCR ALL

CURRENCIES 100% 293%

LIQUIDITY COVERAGE RATIO (LCR): Designed to ensure that financial

institutions have the necessary liquid assets to overcome short-term liquidity

disruptions, i.e. expected net deposit outflows over the next 30 days.

Officially launched EU in October

2015. Requirement stands at 80%

but will reach 100% when fully

phased in 1/1/18.

NSFR ALL

CURRENCIES100% 157%1)

NET STABLE FUNDING REQUIREMENT (NSFR): Shows the availability of

stable funding in relation to the required level of stable funding, based on the

riskiness of assets. Essentially requires banks to maintain stable funding

sources to reduce the likelihood of disruptions in their funding that will deplete

its liquidity in a way that could increase the risk of failure.

NSFR will be officially introduced in

2018.

1) March 2017 figure.

Gradual abolition of Regulatory Limits

Effective

15 Sep 2017

Effective

1 Jan 2018

Effective

1 Jul 2018

Effective

1 Jan 2019

-17% -20% -25% No limit

-30% -35% No limit No limit

18% 15% 12% No limit

50% 40% No limit No limit

80% 60% 60% No limit

On 15 September 2017, the CBC announced the gradual abolition of its prudential liquidity framework effective immediately,

with full abolition effective 1 January 2019


All rights reserved

Key takeaways

Rationale

• A systemic bank in a growing economy

• Improving asset quality

90dpd reduced by 12% y-o-y, with the 90dpd ratio down to 44,9% from 48,6% a year earlier and 90dpd

provision coverage improved to 66%

NPEs reduced for the 7th consecutive quarter; NPEs ratio down to 56% and NPEs provision coverage

improved to 60%; overall NPEs coverage at 115%

Through the creation of the first debt servicing company in Cyprus, the Bank will be able to effectively

tackle its problems loans in an accelerated way and with higher recoveries, leveraging on the knowhow,

proven expertise and technical experience of APS Holding

• New lending of €185 m during 1H17, as part of the Bank’s “Build” strategy

• A solid deposit franchise, with a low ratio of loans to deposits of 48% enabling business expansion

• CET1 ratio (FL) of 13,6% and Tier 1 ratio (FL) of 17,3%, well above minimum capital requirements

• Profit before provisions of €51,8 m and loss after tax of €22,9 m due to elevated impairment losses and

provisions


All rights reserved

Credit Ratings Investor Relations Team

Constantinos Pittalis (Investor Relations Manager):

[email protected], +35722500794

Maria Elia:

[email protected], +35722500820

[email protected]

Website:

www.hellenicbank.com

Moody’s – 20 December 2016

Long and short-term Bank Deposit Rating: Caa1/NP

Commercial Paper: Not Prime

Baseline Credit Assessment: caa2

Positive outlook

Fitch – 13 April 2017

Long and short-term Issuer Default Rating: B/B

Viability rating: b

Stable outlook

Securities ISIN numbers:• ΗΒ (shares) - CY0105570119

• HBCS1 (CSC 1) - CY0144170111

• HBCS2 (CSC 2) - CY0144180110

Branch Network:• 52 branches

• 7 Commercial Centres

• 2 Corporate Centres

• 1 Transaction Banking Shipping (Shipping customers can be serviced at any International Business Centre)

• 3 International Business Centres

• 4 Representative Offices

Other information

mailto:[email protected]



http://www.hellenicbank.com/


All rights reserved

Appendix – Economic environment and Additional information


All rights reserved

Strong growth driven by consumption, investment and net exports

Annual Real GDP growth (y-o-y % change)

1,3%0,3%

-3,2%

-5,9%

-1,5%

1,7%2,8%

3,5% 3,2%

2010 2011 2012 2013 2014 2015 2016 2017f 2018f

Real GDP growth and contributions (y-o-y % change)

Source: Ministry of Finance, HB – Economic Research

Quarterly Real GDP growth (y-o-y and q-o-q % change)

0,9%

3,5%

20

11

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

12

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

14

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

15

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

16

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

17

Q1

20

17

Q2

real GDP, QoQ real GDP, YoY

Strong rebound in Economic Sentiment Indicator

60

70

80

90

100

110

120

2011-0

1

2011-0

4

2011-0

7

2011-1

0

2012-0

1

2012-0

4

2012-0

7

2012-1

0

2013-0

1

2013-0

4

2013-0

7

2013-1

0

2014-0

1

2014-0

4

2014-0

7

2014-1

0

2015-0

1

2015-0

4

2015-0

7

2015-1

0

2016-0

1

2016-0

4

2016-0

7

2016-1

0

2017-0

1

2017-0

4

2017-0

7

Cyprus European Union Euro Area

1,3%0,3%

-3,2%

-5,9%

-1,5%

1,7%2,8% 3,6%

2010 2011 2012 2013 2014 2015 2016 2017 H1

investments government consumptionnet exports gdp growth


All rights reserved

3,1%

0,4%

-0,3%

-1,5%-1,2%

1,1%1,5%

2012 2013 2014 2015 2016 2017f 2018f

Labor market conditions and inflation continue to improve

Unemployment in steady decline Inflation moving towards positive trajectory


Number of Unemployed and Unemployment rate

47,0

11,0%

0%

4%

8%

12%

16%

20%

30

40

50

60

70

80

201

2Q

1

201

2Q

2

201

2Q

3

201

2Q

4

201

3Q

1

201

3Q

2

201

3Q

3

201

3Q

4

201

4Q

1

201

4Q

2

201

4Q

3

201

4Q

4

201

5Q

1

201

5Q

2

201

5Q

3

201

5Q

4

201

6Q

1

201

6Q

2

201

6Q

3

201

6Q

4

201

7Q

1

201

7Q

2

Number of unemployed ('000) Unemployment rate, % (rhs)

Historical evolution of Consumer Price Index

85

95

105

115

125

2012-0

12012-0

32012-0

52012-0

72012-0

92012-1

12013-0

12013-0

32013-0

52013-0

72013-0

92013-1

12014-0

12014-0

32014-0

52014-0

72014-0

92014-1

12015-0

12015-0

32015-0

52015-0

72015-0

92015-1

12016-0

12016-0

32016-0

52016-0

72016-0

92016-1

12017-0

12017-0

32017-0

52017-0

7

Headline CPI Energy Prices Core CPI

6,3%7,9%

11,9%

15,9% 16,3%15,0%

13,3%

11,0%9,5%68,9%

67,6%

64,6%

61,7% 62,1%62,7%

63,5%64,0%

65,0%

2010 2011 2012 2013 2014 2015 2016 2017f 2018f

Unemployment Rate (ages 15-64) - LHS

Employment Rate (ages 15-64) - RHS


All rights reserved

-4,7%-5,7% -5,6% -5,1%

-0,2% -0,2% 0,4% 0,9%

1,0%

-2,70%-3,60% -2,90%

-1,80%

2,60% 2,60% 3% 3,50% 3,60%

56%65%

79%

102% 107% 108% 108% 103% 99%

2010 2011 2012 2013 2014 2015 2016 2017f 2018f

Government budget balance (% of GDP)

Government primary balance (% of GDP)

Gross public debt - rhs (% of GDP)

Prudent fiscal policy delivers strong results

Source: Ministry of Finance, Bloomberg, HB – Economic Research

Public Finances (% of GDP) Public Debt Structure

Government Bonds

0%

2%

4%

6%

8%

10%

12%

14%

16%

201

0-0

1

201

0-0

4

201

0-0

7

201

0-1

0

201

1-0

1

201

1-0

4

201

1-0

7

201

1-1

0

201

2-0

1

201

2-0

4

201

2-0

7

201

2-1

0

201

3-0

1

201

3-0

4

201

3-0

7

201

3-1

0

201

4-0

1

201

4-0

4

201

4-0

7

201

4-1

0

201

5-0

1

201

5-0

4

201

5-0

7

201

5-1

0

201

6-0

1

201

6-0

4

201

6-0

7

201

6-1

0

201

7-0

1

201

7-0

4

201

7-0

7

Portugal 10Y

Spain 10Y

Greece 10Y

Cyprus (2020)

Cyprus (2025)

1%4%

6%

23%

63%

3%

Treasury Bills Private Loans Domestic Bonds

Foreign Bonds Official Loans Retail Securities

as of July 2017

0

500

1000

1500

2000

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

+

€

m

Foreign-law securities Domestic-law securities IMF-ESM loans Other loans

as of July 2017

Maturity Profile of General Government Debt


All rights reserved

0

500

1000

1500

2000

2500

3000

20

09

Q1

20

09

Q2

20

09

Q3

20

09

Q4

20

10

Q1

20

10

Q2

20

10

Q3

20

10

Q4

20

11

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

12

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

14

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

15

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

16

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

17

Q1

20

17

Q2

Sales to Locals Sales to Foreigners

Strong performance by the tourism industry - Real estate sector showing signs of recovery


Tourism revenues Real estate prices (base Dec 2009)

Tourism arrivals Number of contracts of property sales

2,53

1,0

1,2

1,4

1,6

1,8

2,0

2,2

2,4

2,6

2,8

20

01

-12

20

02

-06

20

02

-12

20

03

-06

20

03

-12

20

04

-06

20

04

-12

20

05

-06

20

05

-12

20

06

-06

20

06

-12

20

07

-06

20

07

-12

20

08

-06

20

08

-12

20

09

-06

20

09

-12

20

10

-06

20

10

-12

20

11

-06

20

11

-12

20

12

-06

20

12

-12

20

13

-06

20

13

-12

20

14

-06

20

14

-12

20

15

-06

20

15

-12

20

16

-06

20

16

-12

20

17

-06

Revenus (€ bn last 12 months)

3,51

1,0

1,5

2,0

2,5

3,0

3,5

4,0

20

01

-12

20

02

-06

20

02

-12

20

03

-06

20

03

-12

20

04

-06

20

04

-12

20

05

-06

20

05

-12

20

06

-06

20

06

-12

20

07

-06

20

07

-12

20

08

-06

20

08

-12

20

09

-06

20

09

-12

20

10

-06

20

10

-12

20

11

-06

20

11

-12

20

12

-06

20

12

-12

20

13

-06

20

13

-12

20

14

-06

20

14

-12

20

15

-06

20

15

-12

20

16

-06

20

16

-12

20

17

-06

Arrivals (mn last 12 months)

40

50

60

70

80

90

100

20

09Q

4

20

10Q

1

20

10Q

2

20

10Q

3

20

10Q

4

20

11Q

1

20

11Q

2

20

11Q

3

20

11Q

4

20

12Q

1

20

12Q

2

2012Q

3

20

12Q

4

20

13Q

1

20

13Q

2

20

13Q

3

2013Q

4

20

14Q

1

20

14Q

2

20

14Q

3

20

14Q

4

2015Q

1

20

15Q

2

20

15Q

3

20

15Q

4

20

16Q

1

20

16Q

2

20

16Q

3

20

16Q

4

20

17Q

1

Apartments Houses Retail Warehouse Office


All rights reserved

1,3%0,3%

-3,2%

-5,9%

-1,5%

1,7%2,8%

3,6%

2010 2011 2012 2013 2014 2015 2016 2017H1

Professional services Real estate

Financial services Tourism and trade (retail and transportation)

Construction Agriculture & manufacturing

GDP growth

Cyprus offers a diversified economy with a broad based recovery -Construction sector showing signs of bottoming out

Broad based recovery Number of new business registrations (‘000)

Construction sector is gaining momentum Construction – leading indicators (%)

9,4 9,4 8,5 9,111,6

14,5

20,3

29,0

24,5

16,119,3 19,5

18,0

10,8 11,1 11,213,6

8,5

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7 A

UG

Source: Cyprus Statistical Services, Department of Registrar of companies and Official Receiver, HB – Economic Research

11% 11% 10% 9% 8% 7% 6% 5% 4% 4% 4% 5%9% 8%

-3%

-18%-8% -8%

-20% -22%

-12%

-2%

9%23%

Construction (% of GDP) Construction growth rate (yoy)

-60%

-40%

-20%

0%

20%

40%

60%

20

10

-01

20

10

-04

20

10

-07

20

10

-10

20

11

-01

20

11

-04

20

11

-07

20

11

-10

20

12

-01

20

12

-04

20

12

-07

20

12

-10

2013-0

1

20

13

-04

20

13

-07

20

13

-10

20

14

-01

20

14

-04

20

14

-07

20

14

-10

20

15

-01

20

15

-04

20

15

-07

20

15

-10

20

16

-01

20

16

-04

2016-0

7

20

16

-10

20

17

-01

20

17

-04

Cement Sales - Tones (yoy growth) Building Permits - Area (yoy growth)

Average of 15,1


All rights reserved

-12

-10

-8

-6

-4

-2

0

2

4

6

8

20

07

-05

20

07

-10

20

08

-03

20

08

-08

20

09

-01

20

09

-06

20

09

-11

20

10

-04

20

10

-09

20

11

-02

20

11

-07

20

11

-12

20

12

-05

20

12

-10

20

13

-03

20

13

-08

20

14

-01

20

14

-06

20

14

-11

20

15

-04

20

15

-09

20

16

-02

20

16

-07

20

16

-12

20

17

-05

Notc

he

s a

bo

ve

/(b

elo

w)

Inve

stm

en

t G

rad

e

S&P Moody's Fitch

20

12-0

12

012

-03

20

12-0

52

012

-07

20

12-0

92

012

-11

20

13-0

12

013

-03

20

13-0

52

013

-07

20

13-0

92

013

-11

20

14-0

12

014

-03

20

14-0

52

014

-07

20

14-0

92

014

-11

20

15-0

12

015

-03

20

15-0

52

015

-07

20

15-0

92

015

-11

20

16-0

12

016

-03

20

16-0

52

016

-07

20

16-0

92

016

-11

20

17-0

12

017

-03

20

17-0

52

017

-07

20

17-0

9Cyprus Spain Portugal Greece Italy Ireland

20

12-0

12

012

-03

20

12-0

52

012

-07

20

12-0

92

012

-11

20

13-0

12

013

-03

20

13-0

52

013

-07

20

13-0

92

013

-11

20

14-0

12

014

-03

20

14-0

52

014

-07

20

14-0

92

014

-11

20

15-0

12

015

-03

20

15-0

52

015

-07

20

15-0

92

015

-11

20

16-0

12

016

-03

20

16-0

52

016

-07

20

16-0

92

016

-11

20

17-0

12

017

-03

20

17-0

52

017

-07

20

17-0

9

Cyprus Spain Portugal Greece Italy Ireland

Upgraded country ratings signaling improved performance

Source: Bloomberg

Moody’s Investors Service S&P Global Ratings

Fitch Ratings

Ba3

BB-

BB+

20

12-0

12

012

-03

20

12-0

52

012

-07

20

12-0

92

012

-11

20

13-0

12

013

-03

20

13-0

52

013

-07

20

13-0

92

013

-11

20

14-0

12

014

-03

20

14-0

52

014

-07

20

14-0

92

014

-11

20

15-0

12

015

-03

20

15-0

52

015

-07

20

15-0

92

015

-11

20

16-0

12

016

-03

20

16-0

52

016

-07

20

16-0

92

016

-11

20

17-0

12

017

-03

20

17-0

52

017

-07

20

17-0

9

Cyprus Spain Portugal Greece Italy Ireland

Cyprus credit rating relative to “investment grade” history

-1; BB+; POS

-3; BB-; POS-3; Ba3; POS

Notches relative to IG;Rating;Outlook

Investment Grade


All rights reserved

Group income statement


[€ m] 1H17 1H16 y-o-y 2Q17 1Q17 q-o-q 4Q16 3Q16 2Q16

Interest income 85,3 93,5 (9%) 42,0 43,3 (3%) 46,4 45,3 46,6

Interest expense (19,0) (18,8) 1% (9,5) (9,5) (0%) (9,7) (9,3) (9,6)

Net interest income 66,3 74,7 (11%) 32,6 33,8 (4%) 36,8 36,0 37,0

Net fee and commission income 22,1 25,3 (13%) 11,3 10,8 4% 14,8 11,9 12,3

Net gains on disposal and revaluation of foreign

currencies and financial instruments7,7 20,7 (63%) 4,8 2,9 70% 2,8 3,9 17,0

Other income 32,4 10,3 216% 23,7 8,7 174% 7,2 3,3 5,0

Total net income 128,5 131,0 (2%) 72,4 56,1 29% 61,6 55,1 71,3

Staff costs (43,4) (40,7) 7% (22,5) (20,9) 8% (20,8) (20,5) (20,1)

Depreciation and amortisation (3,7) (2,8) 29% (1,8) (1,8) 1% (1,7) (1,5) (1,4)

Administrative and other expenses (29,6) (28,7) 3% (13,3) (16,3) (19%) (14,2) (13,5) (13,7)

Total expenses (76,7) (72,3) 6% (37,6) (39,0) (4%) (36,7) (35,5) (35,3)

Profit from ordinary operations before

impairment losses and provisions to cover

credit risk

51,8 58,8 (12%) 34,8 17,1 104% 24,9 19,6 36,0

Impairment losses and provisions to cover credit

risk(77,6) (48,8) 59% (50,3) (27,3) 84% (51,1) (15,4) (27,2)

(Loss)/profit before taxation (25,8) 10,0 -- (15,6) (10,2) 52% (26,2) 4,2 8,9

Taxation 2,9 (8,9) (133%) 2,8 0,2 -- (41,4) (0,4) (8,5)

(Loss)/profit for the period (22,9) 1,1 -- (12,8) (10,1) 27% (67,6) 3,9 0,4

Non-controlling interest (0,5) (0,4) +25% (0,1) (0,4) (85%) (0,3) (0,1) 0

(Loss)/profit attributable to the shareholders

of the parent company(23,4) 0,7 -- (12,9) (10,5) 22% (67,9) 3,8 0,4


All rights reserved

Group statement of financial position


[€ m]Jun-17 Dec-16 Change

% Assets

Jun-17 Dec-16

Cash balances with Central Banks 2.055 2.083 (1%) 30% 30%

Placements with other banks 476 549 (13%) 7% 8%

Loans and advances to customers 2.780 2.926 (5%) 41% 42%

Debt securities 1.069 1.149 (7%) 16% 16%

Equity securities and collective investment units 16 16 2% 0% 0%

Property, plant and equipment 100 100 0% 1% 1%

Intangible assets 31 27 16% 0% 0%

Deferred tax asset 12 8 38% 0% 0%

Other assets 209 179 17% 3% 3%

Total assets 6.754 7.038 (4%) 100% 100%

Deposits by banks 115 101 14% 2% 1%

Customer deposits and other customer accounts 5.805 6.111 (5%) 86% 87%

Tax payable 5 5 0% 0% 0%

Deferred tax liability 2 2 3% 0% 0%

Other liabilities 125 112 11% 2% 2%

Total liabilities 6.052 6.331 (4%) 90% 90%

Loan capital 140 140 0% 2% 2%

Share capital 99 99 0% 1% 1%

Reserves 460 464 (1%) 7% 7%

Shareholders’ equity 559 563 (1%) 8% 8%

Non-controlling interest 4 3 14% 0% 0%

Total liabilities and equity 6.754 7.038 (4%) 100% 100%


All rights reserved

3.063 3.157 3.117 3.108 3.082 3.167

1.385 1.195 1.128 1.250 1.153 935

974 966 987 1.034 1.063 1.017

393 408 424 361 359 349

323 333 336 357 354 338

6.139 6.059 5.993 6.111 6.0115.805

Dec-15 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Cyprus Russia Other EU Other European countries Other countries

3.012 2.914 2.883 3.043 2.958 2.762

2.398 2.402 2.330 2.243 2.1822.129

574 566 581 614 563584

154 155 177 200 308 330

6.139 6.059 5.993 6.111 6.011 5.805


Demand Time deposits Saving Notice

4.491 4.567 4.532 4.599 4.570 4.602

1.421 1.274 1.280 1.324 1.270 1.030

227 218 180 187 171174

6.139 6.059 5.993 6.111 6.0115.805


EUR USD Other

Evolution of deposits

Deposits by country of customer (€ m)

Deposits by category (€ m)

Deposits by currency (€ m)

Deposits split by size

6%

6%

18%

16%

55%

3%

18%

79%

6%

10%

47%

37%


39%

23%

9%

29%

41%

24%

8%

27%

Up to €100k €100k-€500k €500k-€1m Over €1m

Dec-16 Jun-17


All rights reserved

2.1861.932 1.961 2.083 2.015 2.055

876

857 721 549 607 476

933

947 1.019 1.165 1.096 1.085

3.9953.737 3.701 3.797 3.718 3.616

Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Cash and Balances with Central Banks Placements with other Banks Securities

Breakdown of liquid assets for the period (€ m)

Robust liquidity position

Liquid assets over total assets

1) €12m of equities classified for Balance Sheet purposes in other assets in view of their disposal are accounted for as liquid assets2) Based on Central Bank of Cyprus definition of liquid asset categories 3) Spot rate at the end of the reporting period, annualized


2)3)

Weighted average income rate of each asset class

53% 53% 54%54%

-0,4%

2,1%

0,6%

0,3%

-0,4%

2,2%

1,07%

0,6%

-0,4%

2,0%

0,9%

0,5%

-0,4%

2,0%

0,9%

0,4%

X% X%

1)

54%

-0,4%

1,9%

1,1%

0,5%

-0,4%

1,7%

0,8%

0,3%

54%


All rights reserved

Capital and risk weighted assets breakdown

Capital breakdown € m Dec-14 Dec-15 Dec-16 Mar-17 Jun-17

CET 1 539 584 518 503 486

Additional Tier 1 114 116 119 124 123

Tier 1 653 700 637 627 609

Tier 2 81 18 9 6 5

Total regulatory capital 734 718 645 633 614


Risk Weighted Assets € m Dec-14 Dec-15 Dec-16 Mar-17 Jun-17

Credit Risk 3.480 3.458 3.271 3.202 3.031

Market Risk 7.3 10 9 7 5

Operational Risk 538 489 461 461 461

Total risk exposure amount for

credit valuation adjustments

2 1 2 1 0

Total RWAs 4.027 3.958 3.744 3.671 3.497


All rights reserved

394

644 647 666

94

85 56 35

73

53 48 47 561

782 751 748

Dec 15 Dec-16 Mar-17 Jun-17

Cyprus USA Other

Detailed breakdown of investments in debt securities

1) Moody’s instrument ratings or equivalents - based on the Regulation (EU) 575/2013 (CRR) and the Directive 2013/36/EU (CRD IV) for the RWAs

calculation (as per Section 4, Article 138 of the regulation).

Cyprus Government Bonds by maturity (€ m)Total debt securities by issuer (€ m)

Government bonds by country (€ m)

561

782 751 748

213

286269 278181

6142 2788

2018 16

1.043

1.1491.080 1.069


Government Supranationals Banks Other

225

432 498 488139

9296 178

30

12053 0

394

644 647 666


5 to 10 years 1 to 5 years <1 year

• 38% of debt securities are Aaa rated1)

• 62% are investments in Cyprus Government Bonds (CyGBs) with the Republic of Cyprus currently being rated: Ba3 by Moody’s, BB- by Fitch, BB+ by S&P and B by DBRS

• Market value of CyGBs was €684 m at 30 June 2017, compared to a book value of €666 m

• Supranational organizations include for example Asian Development Bank, EIB, IBRD, Nordic Investment Bank


All rights reserved

Asset quality trends; Loans and advances to customers

[€ m] Dec-15 Dec-16 Mar-17 Jun-17

Carrying amount 3.093 2.926 2.904 2.780

Impaired:

Grade 3 (high risk) 2.529 2.473 2.430 2.314

Individual impairment losses (1.270) (1.347) (1.365) (1.397)

Carrying amount 1.259 1.127 1.065 917

Of which with forbearance measures 553 562 545 458

Past due but not impaired:

Grade 1 (low risk) 90 65 74 45

Grade 2 (medium risk) 88 84 62 33

Grade 3 (high risk) 10 3 4 11

Carrying amount 189 152 140 89

Past due comprises:

0+ up to 30 days 65 62 55 43

30+up to 60 days 58 63 68 12

60+ up to 90 days 40 24 13 27

90 days+ 25 4 4 7

Carrying amount 189 152 140 89


Neither past due nor impaired:

Grade 1 (low risk) 1.228 1.356 1.386 1.422

Grade 2 (medium risk) 424 302 328 360

Grade 3 (high risk) 27 17 14 17

Carrying amount 1.679 1.675 1.728 1.799


Balances after individual impairment 3.126 2.954 2.933 2.806

Collective impairment losses (34) (28) (30) (26)

Total carrying amount 3.093 2.926 2.904 2.780


All rights reserved

less than 90dpd55,1%

more than 90dpd44,9%

Performing; 44,0%

Terminated; 36,6%

Non terminated non performing;

19,4%

Gross loans performance analysis

Gross loans performance evolution (€ m)

Consensual

approachGrowth

Foreclosure

Gross loans performance analysis as at June 2017


4.396

34% 37% 36% 37%

8% 8% 7% 8%

33% 34% 36% 36%

9%12% 12% 11%

16% 9% 8% 9%


Non terminated non perfoming ofwhich with more than 90dpd

Non terminated non perfoming ofwhich with less than 90dpd

Performing of which with noforbearance measures

Performing of which with forbearancemeasures

Terminated

4.300

with forbearance measures

17,8%

with no forbearance

measures82,2%

44%

4.298 4.203

41%

X% Performing Loans % Gross Loans


All rights reserved

2.602

2.504

2.354

(69)

(148)

(60)98

81 (65)

(79)

(54) 3226

Dec-15 D2A Write offs Cured loans NewlyClassified

NPEs

Other Dec-16 D2A Write offs Cured loans NewlyClassified

NPEs

Other Jun-17

Problem loans movement

NPEs formation1)

NPEs movement2)

1) NPE values up to September 2014 are based on CBC’s definition2) Classification “Other” refers to: change in balances/exchange differences/debt for equity swaps, etcNumbers may not add up due to rounding

147 178 141 84 103

-21

44

-81 -22 -7 -50 -19 -46 -104

2.007 2.154

2.3322.473

2.5572.660 2.639 2.683

2.602 2.580 2.573 2.523 2.504 2.4582.354

De

c-1

3

Ma

r-1

4

Jun

-14

Se

p-1

4

Dec-1

4

Ma

r-1

5

Jun

-15

Se

p-1

5

Dec-1

5

Ma

r-1

6

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-1

7

Jun

-17

Quarterly change (€ m) NPEs (€ m) Linear (Quarterly change (€ m))

90dpd formation

-1 -41 -48 -117 -64 -23

2.181 2.180 2.139 2.091 1.974 1.910 1.887

Dec-1

5

Ma

r-1

6

Jun

-16

Se

p-1

6

Dec-1

6

Ma

r-1

7

Jun

-17

Quarterly change (€ m) 90dpd (€ m) Linear (Quarterly change (€ m))


All rights reserved

Non financial corporations lending: NPEs and provisions coverage

Construction Wholesale and

retail trade

Real Estate activities

Accommodation and food service

activities

Manufacturing Other sectorsNon-financial corporations

Provisions (%) of NPEs


Gross loans (€ m)

18% 17% 5% 7% 13%6%66%

48,6

%

53,1

%

59,1

%

42,5

%

47,9

%

54,5

%

57,8

%

61,7

%

66,9

%

50,4

%

54,3

%

60,9

%

43,1

%

46,5

%

49,5

%

46,0

%

57,1

%

61,6

%

53,9

%

53,3

%

59,7

%

Dec-1

5

Dec-1

6

Jun

-17

Dec-1

5

Dec-1

6

Jun

-17

Dec-1

5

Dec-1

6

Jun

-17

Dec-1

5

Dec-1

6

Jun

-17

Dec-1

5

Dec-1

6

Jun

-17

Dec-1

5

Dec-1

6

Jun

-17

Dec-1

5

Dec-1

6

Jun

-17

62,7

%

61,8

%

58,8

%

84,4

%

81,6

%

78,2

%

60,9

%

59,7

%

60,5

%

61,2

%

62,1

%

53,9

%

55,3

%

47,7

%

44,5

%

44,3

%

45,1

%

42,9

%

45,9

%

50,7

%

48,1

%

2.942

2.8702.761

821 801 734 704 701 692296 266 220 327 303 293 265 251 264

529 548 557

NPEs as per EBA definitionClassification based on Institutional sector codes and NACE codes (European Commission)Other sectors” includes a number of different sectors including Professional, scientific and technical activities, Transport and storage, Human health services and social work activitiesNumbers may not add up due to rounding

as a % of total gross loans at June 2017X%


All rights reserved

Households lending: NPEs and NPEs provisions coverage

Households Residential mortgage loans Credit for consumption

Provisions (%) of NPEs


Gross loans (€ m)

X%

33% 15% 6%

54,3%59,4%

63,6%

41,1% 43,5% 49,9%

74,5%79,0% 80,9%

57,3%62,2% 65,7%

Dec-15 Dec-16 Jun-17 Dec-15 Dec-16 Jun-17 Dec-15 Dec-16 Jun-17 Dec-15 Dec-16 Jun-17

52,1% 51,4% 50,8%43,0% 38,2% 37,2%

57,5% 58,7% 58,4% 62,3% 64,2%63,9%

1.358 1.362 1.376

656 619 624248 247 251

454 496 500

as a % of total gross loans at Jun-17NPEs as per EBA definitionClassification based on Institutional sector codes (European Commission)1) "Other” includes self-employed workers and non-profit institutions serving households

Other1)

12%


All rights reserved

Non Financial Corporations – Analysis of loan portfolio (€ m)

Loan performance analysis by type of customer

1.066 960 926 903

778 812 797 720

293 240 225 231

805 858 912 906

2.942 2.870 2.860 2.761


Performing exposures

Performing exposures - Forbone

NPEs - Forbone

NPEs - Non-Forbone

Households – Analysis of loan portfolio (€ m)

561 550 556 556

146 150 147 14363 75 82 86

588 587 586 591

1.358 1.362 1.371 1.376


Performing exposures

Performing exposures - Forbone

NPEs - Forbone

NPEs - Non-Forbone

X%Performing Loans %

Gross Loans

37%41%

X%Performing Loans %

Gross Loans

48% 49%


All rights reserved

Gross forborne exposures by sector

Forborne exposures breakdown

Coverage of forborne exposures

Classification of forborne exposures

1)

97 108 120 126

651 675 636 577

57 54 5454

87 67 6652

247 209 207203

177 198 202202

1.317 1.311 1.2851.214

30,0% 30,5% 29,9% 28,9%


Trade Construction and Real Estate

Manufacturing Tourism

Other sectors Retail

Forborne exposures % Gross loans

30% 31% 32% 34%

124%109% 106% 107%

154%140% 138% 141%


Total coverage

Tangible collateral of forborne exposures

Provisioning coverage of forborne exposures

27% 25% 25% 27%

73% 75% 75% 73%


Performing Non-Performing Exposures

1) Open market value indexed to today using public available indices


All rights reserved

Evripides Polykarpou

Acting Chairperson, Independent

Marinos S. Yannopoulos

Vice- Chairman, Non-independent

Ioannis A. Matsis

Executive, non independent

Mariana Pantelidou Neophytou

Independent

David Whalen Bonanno

Independent

Irena A. Georgiadou

Independent

Lars Kramer

Executive, Non-independent

Christodoulos A. Hadjistavris

Independent

Andreas Christofides

Independent

Lambros Papadopoulos

Independent

Andrew Charles Wynn

IndependentStephen John Albutt

Independent

Demetrios Efstathiou

Independent

Shareholders information; Board composition

3,13 3,05 3,013,11 3,11 3,05 3,07

2,71 2,68 2,66

Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Net tangible book value per share evolution (€)

Third Point Hellenic Recovery Fund LP

26,2%

Wargaming Group Limited

24,9%

Demetra Investment Public Ltd

10,1%

EBRD5,4%

Other domestic15,9%

Other international17,5%

Board CompositionMain shareholders

Number of issued shares: 198.474.712

1) As of 24 May 2017, Dr Evripides Polycarpou, Senior Independent Director, is fulfilling the duties of the Chairperson of the Board of Directors 2) Considered as independent under the independence criteria listed in the CSE Corporate Governance Code. They are not independent under the independence criteria listed in the Directive on the Assessment of the Fitness and Probity of the Members of the Management Body and Managers of Authorised Credit Institutions of 2014 of the CBC, which differ from those in the CSE Corporate Governance Code

1)

2)

2)

2)


All rights reserved

Glossary & Definitions

Forborne Exposures:

According to the European Banking Authority’s (EBA) technical standards, forborne exposures are (i) exposures which involve changes in their terms and/or conditions

and (ii) the forbearance measures consist of concessions towards a debtor which aim to address existing or anticipated difficulties on the part of the borrower to service

debt in accordance with the current repayment schedule. Changes in the terms and conditions of a contract that do not occur because the customer is not able to meet

the terms and conditions of the contract due to financial difficulties do not constitute forbearance measures

Non-Performing Exposures (NPEs) (EBA definition):

(i) Material exposures that are over 90 days past due,

(ii) The debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the

number of days past due,

(iii) Exposures in respect of which a default is considered to have occurred in accordance with Article 178 of Regulation (EU) No 575/2013,

(iv) Exposures of debtors against whom legal action has been taken by the Bank or exposures of bankrupt debtors,

(v) Exposures that are found impaired as per the applicable accounting framework,

(vi) Forborne exposures that were NPE at forbearance or became NPE after forbearance and which are re-forborne while under probation (the probation period for

forborne exposures begins once the contract is considered as performing and lasts for two years minimum),

(vii) Forborne exposures reclassified from NPE status i.e. that were NPE at forbearance or became NPE after forbearance and present more than 30 days past due

while under probation

(viii) Further to the above the all-embracing criteria apply as follows: (a) for debtors classified as retail debtors as per the Regulation (EU) No 575/2013, when the Bank

has on-balance sheet exposures to a debtor that are material and are past due by more than 90 days the gross carrying amount of which represents more than

20% of the gross carrying amount of all on-balance sheet exposures to that debtor, all on and off-balance sheet exposures to that debtor shall be considered as

non-performing and (b) for debtors classified as non-retail debtors as per the Regulation (EU) No 575/2013, when the Bank has any on-balance sheet exposures to

a debtor that are non-performing (if the exposure is non-performing due to over 90 days past due it must pass the materiality thresholds), all on and off-balance

sheet exposures to that debtor shall be considered as NPE. Else, only exposures that are non-performing will be classified as such.

NPEs ratio: gross non-performing exposures (EBA definition) divided by gross loans

NPE provision coverage ratio: accumulated impairment losses (individual and collective) divided by gross non-performing exposures

90dpd: an exposure is classified as “past-due” when any amount of principal, interest or fee has not been paid at the date it was due. Over 90 days past due refers to

exposures for which more than 90 days passed since the day that any amount of principal, interest or fee was due and was not paid for a single exposure.


All rights reserved

Glossary & Definitions

CET 1: common equity tier 1 capital divided by Risk Weighted Assets

AT1: additional tier 1 capital

CCB: capital conservation buffer

OCR: overall capital requirement

O-SII: Other Systemically important institution

Leverage ratio: capital measure divided by the total on- and off- balance sheet items (Tier 1/total exposure measure)

D2A: debt to asset arrangement between the Bank and the borrower

Loans to deposits ratio: loans and advances to customers minus accumulated impairment losses divided by customer deposits and other customer accounts

Net Interest Margin ratio (NIM): Net interest income divided by interest bearing assets, annualized

Cost to income ratio: total expenses over total net income

Cost of risk ratio: impairment losses on the value of loans and advances divided by gross loans at the end of the period, annualized. Quarterly 2016 figures do not

include the contractual interest on impaired loans accrued

Earnings/(loss) per share: profit/(loss) divided by the number of shares issued

Return on Equity: profit attributable to shareholders of the parent company (annualized) divided by average equity attributable to shareholders of the parent

company

Net tangible book value per share: equity attributable to shareholders of the parent company less intangible assets divided by the number of issued shares

y-o-y: year on year

q-o-q: quarter on quarter

ECB: European Central Bank

CBC: Central Bank of Cyprus

SREP: Supervisory Review and Evaluation Process

EBA: European Banking Authority

RWAs: Risk Weighted Assets

DTA: deferred tax asset


All rights reserved

Disclaimer

Certain statements in this presentation/announcement including any accompanying slides and subsequent discussions with respect to the business strategy and plans of the Hellenic

Bank Group (term which includes the Hellenic Bank Public Co Ltd and its subsidiary and associate companies) (the “Group”), its current goals and expectations, its projections, beliefs,

possibilities relating to its future financial condition and performance are forward - looking.

By their nature, forward - looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Therefore these risks

and uncertainties could adversely affect the outcome and financial effect of what is described herein and the reader or the audience are cautioned not to place undue reliance on such

forward - looking statements. When relying on forward - looking statements , investors should carefully consider that there are important factors that could cause actual results to differ

materially from those in forward-looking statements, certain of which are beyond the control of the Group, including, but not limited to, domestic and global economic and business

conditions, market related risks such as interest or exchange rate risk, unexpected changes to regulation, competition, technological conditions and other. The forward - looking

statements contained in this presentation/announcement are made as at the date of this presentation/announcement and the Group undertakes no obligation to update or revise any of

same unless otherwise required by applicable law.

This presentation/announcement is delivered to interested parties for information purposes only and neither constitutes a recommendation with respect to any securities nor shall be used

in connection with any investment decision regarding any of the Group’s securities or in relation to any decision whether or how to vote on matters submitted to the Group’s shareholders.

This presentation/announcement is not intended to be relied upon as advice, should not be treated as such and does not form the basis for an informed investment decision. No

representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, correctness or completeness of the information

presented herein.

Nothing in this presentation/announcement constitutes an offer to sell, or the solicitation of an offer to buy, or recommendation, to acquire or dispose of any securities or to engage in any

other transaction. This presentation/announcement contains some publicly available information from inter alia, governmental and regulatory sources and the Group makes no

representation or warranty, express or implied, as to the accuracy, fairness, correctness or completeness of such information.

This presentation/announcement should not be taken or transmitted directly or indirectly to any country or jurisdiction where to do so would be prohibited. Any failure to comply with this

restriction may constitute a violation of applicable law. The distribution of this presentation in other jurisdictions may be restricted by law and persons into whose possession this

presentation comes should inform themselves about and observe, any such restrictions.

To the fullest extent permissible by applicable law, the Group expressly disclaims any responsibility and/or liability for the accuracy of the information expressed in this

presentation/announcement, any errors or omissions in distributing the information and/or any uses to which the information is put. Each recipient of this presentation/announcement is

strongly advised to seek its own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues. This presentation should not be construed as legal,

tax, investment or other advice. Analyses and opinions contained herein may be based on assumptions and projections that, if altered, can change the analyses or opinions expressed.

Nothing contained herein shall constitute any representation or warranty, express or implied, as to future performance of any security, credit, currency, rate or other market or economic

measure. The Group’s past performance is not necessarily indicative of future results.

ΟΜΙΛΟΣ ΕΛΛΗΝΙΚΗΣ ΤΡΑΠΕΖΑΣ

ΑΠΟΤΕΛΕΣΜΑΤΑ ΟΜΙΛΟΥ ΚΑΙ ΕΠΕΞΗΓΗΜΑΤΙΚΗ ΚΑΤΑΣΤΑΣΗ ΓΙΑ ΤΗΝ ΕΞΑΜΗΝΙΑ ΠΟΥ ΕΛΗΞΕ ΣΤΙΣ 30 ΙΟΥΝΙΟΥ 2017

• ∆είκτης Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1 (CET 1) στο 13,88% και ∆είκτης

Κεφαλαιακής Επάρκειας στο 17,55%

• ∆είκτες Κεφαλαιακής Επάρκειας που υπερβαίνουν τις ελάχιστες κανονιστικές απαιτήσεις

• Επιτυχής ολοκλήρωση της συµφωνίας µε την APS Holding a.s. για τη δηµιουργία της

πρώτης πλατφόρµας διαχείρισης χρεών και ακινήτων στην Κύπρο

• Μη εξυπηρετούµενες χορηγήσεις (ΜΕΧ) µειωµένες στα €2.354 εκατ., σε σύγκριση µε

€2.504 εκατ. στις 31 ∆εκεµβρίου 2016

• Μειωµένος δείκτης ΜΕΧ προς το σύνολο των µεικτών χορηγήσεων στο 56,0%

• Βελτιωµένος δείκτης κάλυψης στο 60,4%

Επισκόπηση Αποτελεσµάτων

Βασικά στοιχεία Λογαριασµού Αποτελεσµάτων (€εκατ.)

1η Εξαµηνία

2017

1η Εξαµηνία

2016 Ετήσια ∆

2η Τριµηνία

2017

1η Τριµηνία

2017

Τριµηνιαία ∆

Κέρδος από συνήθεις εργασίες πριν τις ζηµιές αποµείωσης και προβλέψεις για την κάλυψη του πιστωτικού κινδύνου

51,8 58,8 -12% 34,8 17,1 +104%

Ζηµιές αποµείωσης και προβλέψεις για την κάλυψη του πιστωτικού κινδύνου

(77,6) (48,8) +59% (50,3) (27,3) +84%

Φορολογία 2,9 (8,9) -133% 2,8 0,2 +1.635%

(Ζηµιά)/κέρδος για την περίοδο (22,9) 1,1 -2.173% (12,8) (10,1) +27%

(Ζηµιά)/κέρδος που αναλογεί στους κατόχους µετοχών της µητρικής εταιρείας

(23,4) 0,7 -3.417% (12,9) (10,5) +22%

Η ζηµιά που αναλογεί στους µετόχους της µητρικής εταιρείας για την 1η εξαµηνία του 2017 ανήλθε σε €23,4 εκατ. (2η τριµηνία 2017: €12,9 εκατ. ζηµιά, 1η τριµηνία 2017: €10,5 εκατ. ζηµιά) σε σύγκριση µε €0,7 εκατ. κέρδη την 1η εξαµηνία του 2016. Η κερδοφορία του Οµίλου πριν τις ζηµιές αποµείωσης και προβλέψεις για την κάλυψη του πιστωτικού κινδύνου, βελτιώθηκε σε τριµηνιαία βάση, κυρίως λόγω του καθαρού κέρδους ύψους €19,0 εκατ. από την πώληση των δραστηριοτήτων της Μονάδας ∆ιαχείρισης Καθυστερήσεων της Τράπεζας, µε την συναλλαγή να έχει ολοκληρωθεί στο τέλος της δεύτερης τριµηνίας του 2017. Την 1η εξαµηνία του 2017 σηµειώθηκε ζηµιά πριν τη φορολογία ύψους €25,8 εκατ., σε σύγκριση µε €10,0 εκατ. κέρδη την αντίστοιχη περσινή εξαµηνία. Σε τριµηνιαία βάση, σηµειώθηκε ζηµιά ύψους €15,6 εκατ. τη 2η τριµηνία του 2017 σε σύγκριση µε ζηµιά ύψους €10,2 εκατ. την 1η τριµηνία του 2017. Κατά τη διάρκεια της 2ης τριµηνίας του 2017, η Τράπεζα προχώρησε σε ορισµένες τροποποιήσεις των παραµέτρων και παραδοχών για την εκτίµηση του ανακτήσιµου ποσού των ενυπόθηκων ακινήτων που χρησιµοποιούνται στη µεθοδολογία της Τράπεζας για υπολογισµό των ζηµιών αποµείωσης χορηγήσεων που σχετίζονται κυρίως µε την εξάλειψη µελλοντικών αναπροσαρµογών του δείκτη τιµών ακινήτων και τη χρήση µεγαλύτερης αποµείωσης της αξίας των ακινήτων κατά τη ρευστοποίησή τους. Οι τροποποιήσεις έγιναν στο πλαίσιο των ∆ιεθνών Προτύπων Χρηµατοοικονοµικής Αναφοράς λαµβάνοντας υπόψη τα επιταχυνόµενα πλάνα της Τράπεζας για τη µείωση των προβληµατικών δανείων, τις πρόσφατες εξελίξεις στην αγορά, καθώς και το συνεχή διάλογο µε την ΕΚΤ στα πλαίσια της ∆ιαδικασίας Εποπτικής Εξέτασης και Αξιολόγησης (∆ΕΕΑ) για το 2017 και είχαν ως αποτέλεσµα αυξηµένη χρέωση προβλέψεων. Αναβαλλόµενες φορολογικές απαιτήσεις ύψους €3,2 εκατ. αναγνωρίστηκαν τη 2η τριµηνία του 2017 σαν αποτέλεσµα των φορολογικών ζηµιών του 1ου εξαµήνου του 2017. Κατά τη διάρκεια της 1ης εξαµηνίας του 2016, αναβαλλόµενες φορολογικές απαιτήσεις ύψους €8,5 εκατ. διαγράφηκαν και χρεώθηκαν στον Λογαριασµό Αποτελεσµάτων. Η διαγραφή των αναβαλλόµενων φορολογικών απαιτήσεων, προέκυψε από φορολογικές ζηµιές για τις οποίες η Τράπεζα έκρινε ότι δεν ήταν πλέον πιθανό ότι το φορολογικό όφελος θα χρησιµοποιηθεί.

Κατάσταση Οικονοµικής Θέσης

Βασικά στοιχεία Κατάστασης Οικονοµικής Θέσης (€εκατ.) 30.06.2017 31.12.2016 ∆

Μεικτές Χορηγήσεις σε πελάτες 4.203 4.300 -2%

Μεικτές Μη Eξυπηρετούµενες Χορηγήσεις (ΜΕΧ) 2.354 2.504 -6%

Μεικτές Eξυπηρετούµενες Χορηγήσεις 1.849 1.796 3%

Καθαρές Χορηγήσεις σε πελάτες 2.780 2.926 -5%

Στοιχεία προς επένδυση 3.623 3.797 -5%

Σύνολο Περιουσιακών στοιχείων 6.754 7.038 -4%

Καταθέσεις 5.805 6.111 -5%

Ίδια κεφάλαια που αναλογούν στους κατόχους µετοχών της µητρικής εταιρείας 559 563 -1%

Σταθµισµένα περιουσιακά στοιχεία (ΣΠΣ) 3.497 3.744 -7%

Στις 30 Ιουνίου 2017, το σύνολο των περιουσιακών στοιχείων του Οµίλου ανήλθε σε €6,8 δισ. και παρουσίασε µείωση της τάξης του 4% σε σχέση µε τις 31 ∆εκεµβρίου 2016. Η µείωση προήλθε κυρίως από τη µείωση στα στοιχεία προς επένδυση και στις χορηγήσεις σε πελάτες. Στις 30 Ιουνίου 2017, οι καταθέσεις πελατών ανήλθαν σε €5,8 δισ. (31 ∆εκεµβρίου 2016: €6,1 δισ.). Οι καταθέσεις αποτελούνταν από καταθέσεις σε Ευρώ ύψους €4,6 δισ. (καταθέσεις σε Ευρώ στις 31 ∆εκεµβρίου 2016: €4,6 δισ.) και καταθέσεις σε ξένα νοµίσµατα, κυρίως Αµερικάνικα ∆ολάρια, ύψους €1,2 δις. (καταθέσεις σε ξένα νοµίσµατα στις 31 ∆εκεµβρίου 2016: €1,5 δισ.). Η τάση των πελατειακών καταθέσεων αντικατοπτρίζει τη στρατηγική της Τράπεζας να διατηρήσει χαµηλό κόστος καταθέσεων, λαµβάνοντας υπόψη την ισχυρή της ρευστότητα. Η µείωση των καταθέσεων σε ξένα νοµίσµατα κατά €0,3 δισ., από τα οποία τα €0,1 δισ. ήταν κυρίως λόγω της αποδυνάµωσης του Αµερικάνικου ∆ολαρίου έναντι του Ευρώ, αντανακλά τις προσπάθειες της Τράπεζας να επανατοποθετήσει τη στρατηγική της για το Τµήµα ∆ιεθνούς Τραπεζικής. Το µερίδιο αγοράς καταθέσεων της Τράπεζας στις 30 Ιουνίου 2017 διαµορφώθηκε στο 12,1% (31 ∆εκεµβρίου 2016: 12,6%). Το σύνολο των νέων χορηγήσεων που εγκρίθηκαν την 1η εξαµηνία του 2017 έφτασε τα €184,8 εκατ. (2016: €353,7 εκατ.). Η Τράπεζα συνέχισε την παροχή χορηγήσεων προς φερέγγυες επιχειρήσεις και νοικοκυριά, εξετάζοντας παράλληλα και άλλες ευκαιρίες ανάπτυξης. Οι µεικτές χορηγήσεις σε πελάτες στις 30 Ιουνίου 2017 ανήλθαν σε €4.203 εκατ., µειωµένες κατά 2% σε σύγκριση µε τις 31 ∆εκεµβρίου 2016 (€4.300 εκατ.). Το χαρτοφυλάκιο των εξυπηρετούµενων χορηγήσεων αυξήθηκε κατά 3% ενώ το χαρτοφυλάκιο των µη εξυπηρετούµενων χορηγήσεων µειώθηκε κατά 6% αντισταθµίζοντας την επίδραση των νέων χορηγήσεων της εξαµηνίας στις συνολικές µεικτές χορηγήσεις. Κατά την 1η εξαµηνία του 2017, χορηγήσεις ύψους €81,6 εκατ. διαγράφηκαν (2016: €160,5 εκατ.). Το µερίδιο αγοράς χορηγήσεων της Τράπεζας στις 30 Ιουνίου 2017 διαµορφώθηκε στο 7,7% (31 ∆εκεµβρίου 2016: 7,4%). Ο δείκτης καθαρών χορηγήσεων προς καταθέσεις παρέµεινε σταθερός στο 47,9% στις 30 Ιουνίου 2017 (31 ∆εκεµβρίου 2016: 47,9%) εξαιτίας του ίδιου ρυθµού µείωσης στις καταθέσεις και στις καθαρές χορηγήσεις.

Ποιότητα Χαρτοφυλακίου Χορηγήσεων Οι προσπάθειες για την µείωση των προβληµατικών δανείων συνεχίζονται. Το επίπεδο των ΜΕΧ έχει µειωθεί στα €2.354 εκατ. στις 30 Ιουνίου 2017, µε µείωση 6% σε σύγκριση µε €2.504 εκατ. στις 31 ∆εκεµβρίου 2016. Οι τερµατισµένοι λογαριασµοί οι οποίοι περιλαµβάνονταν στις ΜΕΧ ανήλθαν σε €1.536 εκατ. στις 30 Ιουνίου 2017 (31 ∆εκεµβρίου 2016: €1.593 εκατ.). Οι µεικτές χορηγήσεις µε όρους που ήταν αντικείµενο επαναδιαπραγµάτευσης στις 30 Ιουνίου 2017 ανήλθαν σε €1.214 εκατ. (31 ∆εκεµβρίου 2016: €1.311 εκατ.). Κατά τη διάρκεια της 1ης εξαµηνίας του 2017, η Τράπεζα συνέχισε να επικεντρώνεται στην αναδιάρθρωση του χαρτοφυλακίου των ΜΕΧ χρησιµοποιώντας ένα πακέτο βιώσιµων λύσεων, όπως οι ανταλλαγές χορηγήσεων µε περιουσιακά στοιχεία, µειώσεις υπολοίπων/δόσεων, παρατάσεις αποπληρωµής και περίοδοι χάριτος. Ποσό ύψους €296 εκατ. που αφορά συνολικές πελατειακές χορηγήσεις, είχε αναδιαρθρωθεί κατά τη διάρκεια της 1ης εξαµηνίας του 2017, καθώς επίσης ποσό ύψους €81,6 εκατ. διαγράφηκε στα πλαίσια των διαδικασιών αναδιάρθρωσης. Τα αποθέµατα ακινήτων προς πώληση, τα οποία ως επί το πλείστον προέκυψαν από διακανονισµό χρεών των πελατών, ανήλθαν σε €140,3 εκατ. στις 30 Ιουνίου 2017 (31 ∆εκεµβρίου 2016: €117,7 εκατ.). Η µεταβολή στο υπόλοιπο των αποθεµάτων ακινήτων προς πώληση περιλάµβανε €63,4 εκατ. προσθήκες και €40,8 εκατ. πωλήσεις.

Μέσα στο πλαίσιο της διαχείρισης της ποιότητας των περιουσιακών στοιχείων του Οµίλου, η Τράπεζα έχει υπογράψει συµφωνία µε την APS Holding a.s (APS) τον Ιανουάριο του 2017 για τη διαχείριση των ακινήτων και ολόκληρου του χαρτοφυλακίου των ΜΕΧ της. Η συµφωνία προνοούσε την πώληση των δραστηριοτήτων της Μονάδας ∆ιαχείρισης Καθυστερήσεων στη νεοσύστατη εταιρεία APS Debt Servicing Cyprus Ltd (“APS Cyprus”), ενώ η κυριότητα των ακινήτων και το χαρτοφυλάκιο των ΜΕΧ παραµένει στην Τράπεζα. Η ολοκλήρωση της συµφωνίας και η µεταφορά των εργασιών πραγµατοποιήθηκε στις 30 Ιουνίου 2017 ενώ η APS Cyprus ξεκίνησε τις δραστηριότητές της στις 3 Ιουλίου 2017. Μέσω της δηµιουργίας της πρώτης πλατφόρµας διαχείρισης χρεών στην Κύπρο, η Τράπεζα θα είναι σε θέση να αντιµετωπίσει αποτελεσµατικά τις ΜΕΧ µε γρηγορότερο ρυθµό, αξιοποιώντας την τεχνογνωσία και την αποδεδειγµένη πραγµατογνωµοσύνη της APS Holding. Επιπλέον, θα επιτρέψει στην Τράπεζα να επικεντρωθεί στη διαχείριση και ανάπτυξη του εξυπηρετούµενου δανειακού χαρτοφυλακίου και των εργασιών της χρησιµοποιώντας την πλεονάζουσα ρευστότητα της προς όφελος της αγοράς. Ο δείκτης των MEX στο σύνολο των µεικτών χορηγήσεων στις 30 Ιουνίου 2017 µειώθηκε σε 56,0% (31 ∆εκεµβρίου 2016: 58,2%).

Οι συσσωρευµένες ζηµιές αποµείωσης στην αξία των χορηγήσεων, ανήλθαν σε €1.423 εκατ. στις 30 Ιουνίου 2017 (31 ∆εκεµβρίου 2016: €1.374 εκατ.) και αποτελούν το 33,9% των συνολικών µεικτών χορηγήσεων (31 ∆εκεµβρίου 2016: 32,0%).

Ο δείκτης κάλυψης των προβλέψεων ανήλθε στο 60,4% στις 30 Ιουνίου 2017 (31 ∆εκεµβρίου 2016: 54,9%), ενώ λαµβάνοντας υπόψη και την αξία των εµπράγµατων εξασφαλίσεων των ΜΕΧ, ο δείκτης κάλυψης ανήλθε στο 115,3%. Οι αυξηµένες προβλέψεις της 2ης τριµηνίας του 2017, όπως αναφέρεται πιο πάνω, ενισχύουν περαιτέρω την ικανότητα του Οµίλου να επιταχύνει τα σχέδιά του για αποµόχλευση και µείωση του κινδύνου στον ισολογισµό.

Κεφαλαιακή Βάση και Επάρκεια Οι ∆είκτες Κεφαλαιακής Επάρκειας του Οµίλου και της Τράπεζας µε βάση τον Πυλώνα I, που υπερβαίνουν τις ελάχιστες κανονιστικές διατάξεις, διαµορφώθηκαν ως ακολούθως:

∆είκτες Κεφαλαιακής Επάρκειας Όµιλος (µε µεταβατικές διατάξεις)

Όµιλος (χωρίς τις µεταβατικές διατάξεις)

Τράπεζα (µε µεταβατικές διατάξεις)

30.06.2017 31.12.2016 ∆ 30.06.2017 30.06.2017

∆είκτης Κεφαλαιακής Επάρκειας (%) 17,55% 17,24% +31 µβ 17,40% 17,51%

∆είκτης Κεφαλαίου της Κατηγορίας 1 (%) 17,40% 17,01% +39 µβ 17,34% 17,36%

∆είκτης Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1 (CET 1) (%)

13,88% 13,83% +5 µβ 13,63% 13,85%

Κεφάλαια Κοινών Μετοχών της Κατηγορίας 1 (€εκατ)

486 518 -6% 477 485

Σταθµισµένα περιουσιακά στοιχεία (ΣΠΣ) (€εκατ)

3.497 3.744 -7% 3.497 3.503

Η αύξηση των 5 µονάδων βάσης του ∆είκτη Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1 (CET 1) (µε µεταβατικές διατάξεις) σε σύγκριση µε τις 31 ∆εκεµβρίου 2016, ήταν κυρίως ως αποτέλεσµα των πιο κάτω:

i) της συνολικής µείωσης του Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1, κυρίως ως αποτέλεσµα των πιο κάτω: - των ζηµιών της εξαµηνίας (µείωση 68 µονάδες βάσης) πρωτίστως λόγω της αυξηµένης χρέωσης

για ζηµιές αποµείωσης και προβλέψεις για την κάλυψη του πιστωτικού κινδύνου - της καθαρής αύξησης των λοιπών συνολικών εσόδων κυρίως λόγω της επανεκτίµησης των

οµολόγων όπως έχουν αναπροσαρµοστεί από την Τράπεζα για σκοπούς εποπτικού

κεφαλαίου (αύξηση 23 µονάδες βάσης)

- της αύξησης των αναβαλλόµενων φορολογικών απαιτήσεων που προκύπτουν από φορολογικές ζηµιές και των άλλων άυλων περιουσιακών στοιχείων (µείωση 17 µονάδες βάσης) καθώς και της επίδρασης της σταδιακής προσαρµογής των µεταβατικών διατάξεων (µείωση 24 µονάδες βάσης),

ii) της συνολικής µείωσης των ΣΠΣ κυρίως ως αποτέλεσµα της µείωσης των καθαρών χρηµατοδοτούµενων ανοιγµάτων σε αθέτηση (αύξηση 91 µονάδες βάσης).

Στις 30 Ιουνίου 2017 ο ∆είκτης Μόχλευσης του Οµίλου διαµορφώθηκε σε 8,83% (Τράπεζα: 8,82%) σε σύγκριση µε 8,75% (Τράπεζα: 8,74%) στις 31 ∆εκεµβρίου 2016. Ο ∆είκτης Μόχλευσης του Οµίλου, χωρίς τις µεταβατικές διατάξεις, διαµορφώθηκε σε 8,80% (Τράπεζα: 8,79%) σε σύγκριση µε 8,71% (Τράπεζα: 8,70%) στις 31 ∆εκεµβρίου 2016. ∆ιαδικασία Εποπτικής Εξέτασης και Αξιολόγησης (∆ΕΕΑ) 2015 Από τις 20 Νοεµβρίου 2015 η Τράπεζα απαιτείται να διατηρεί, σε ενοποιηµένη βάση, ∆είκτη Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1 (CET 1) ύψους 11,75%, όπως αυτός καθορίζεται από τον Κανονισµό (ΕΕ) αριθ. 575/2013 του Ευρωπαϊκού Κοινοβουλίου και Συµβουλίου, συµπεριλαµβανοµένου του αποθέµατος ασφαλείας διατήρησης κεφαλαίου (CCB) ύψους 2,5% σε πλήρη ισχύ. Η απόφαση της ΕΚΤ, βασίστηκε στη ∆ΕΕΑ, η οποία διεξήχθη σε πληροφορίες διαθέσιµες µε ηµεροµηνία αναφοράς 31 ∆εκεµβρίου 2014. Τον Φεβρουάριο του 2017, η Βουλή των Αντιπρόσωπων της Κύπρου ψήφισε νοµοθεσία, για τροποποίηση του Νόµου περί Εργασιών Πιστωτικών Ιδρυµάτων που εισάγει µεταβατική περίοδο για την εφαρµογή της απαίτησης του αποθέµατος ασφαλείας διατήρησης κεφαλαίου, µε αναδροµική ισχύ από την 1η Ιανουαρίου 2016 σε 0,625%, µε πλήρη εφαρµογή από την 1η Ιανουαρίου 2019 στο 2,5%. Ο ελάχιστος ∆είκτης Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1 (CET 1) για τις 31 ∆εκεµβρίου 2016 µειώνεται σε 9,875%, εφαρµόζοντας τις διατάξεις της πιο πάνω τροποποίησης του νόµου. ∆ιαδικασία Εποπτικής Εξέτασης και Αξιολόγησης 2016 Τον ∆εκέµβριο του 2016, µετά την οριστική απόφαση της ΕΚΤ σχετικά µε τις απαιτήσεις προληπτικής εποπτείας η οποία βασίστηκε στη ∆ΕΕΑ, η οποία διεξήχθη σύµφωνα µε το Άρθρο 4(1)(στ) του Κανονισµού (ΕΕ) αριθ. 1024/2013 µε ηµεροµηνία αναφοράς 31 ∆εκεµβρίου 2015, και επιπλέον σε σχετική πληροφόρηση που λήφθηκε µετά την ηµεροµηνία αυτή, η Τράπεζα απαιτείται να διατηρεί για το 2017, σε ενοποιηµένη βάση, σε σταδιακή εφαρµογή ∆είκτη Κεφαλαιακής Επάρκειας ύψους 12,75%, ο οποίος αποτελείται από:

• τις ελάχιστες κεφαλαιακές απαιτήσεις του Πυλώνα Ι ύψους 8% σύµφωνα µε το Άρθρο 92(1) του Κανονισµού (ΕΕ) αριθ. 575/2013 (το οποίο µπορεί να καλυφθεί έως και 1,5% µε Πρόσθετο Κεφάλαιο της Κατηγορίας 1 (Additional Tier 1) και µέχρι 2% µε Κεφάλαιο της Κατηγορίας 2 (Tier 2)),

• τις απαιτήσεις ιδίων κεφαλαίων του Πυλώνα ΙΙ ύψους 3,5%, για διατήρηση ίδιων κεφαλαίων που να υπερβαίνουν τις ελάχιστες απαιτήσεις ιδίων κεφαλαίων (που πρέπει να αποτελείται εξ’ ολοκλήρου από Κεφάλαιο Κοινών Μετοχών της Κατηγορίας 1), και

• σταδιακή εφαρµογή στη συνδυασµένη απαίτηση αποθέµατος ασφαλείας η οποία περιλαµβάνει το απόθεµα ασφαλείας διατήρησης κεφαλαίου (CCB) ύψους 1,25% για το 2017 σύµφωνα µε την πιο πάνω τροποποίηση του νόµου, το οποίο πρέπει να αποτελείται εξ’ ολοκλήρου από Κεφάλαιο Κοινών Μετοχών της Κατηγορίας 1.

Επιπρόσθετα, η συνδυασµένη απαίτηση αποθέµατος ασφαλείας για την Ελληνική Τράπεζα περιλαµβάνει:

• το απόθεµα ασφαλείας O-SII σε πλήρη εφαρµογή ύψους 1%, και εφαρµόζεται σταδιακά σε περίοδο τεσσάρων ετών αρχίζοντας από την 1η Ιανουαρίου 2019,

• το αντικυκλικό κεφαλαιακό απόθεµα ασφαλείας (CCyB) το οποίο η ΚΤΚ καθόρισε το ποσοστό στο 0% για το 2016 και για το 2017 (το αντικυκλικό κεφαλαιακό απόθεµα ασφαλείας για την Τράπεζα για το 2016 ήταν 0%),

• σε απόθεµα ασφαλείας συστηµικού κινδύνου το οποίο δεν έχει καθοριστεί µέχρι σήµερα. Λαµβάνοντας υπόψη τη σταδιακή εφαρµογή της νοµοθεσίας για το κεφαλαιακό απόθεµα ασφαλείας, ο ∆είκτης Κεφαλαίου Κοινών Μετοχών της Κατηγορίας 1 (CET 1) και ο ∆είκτης Κεφαλαίου της Κατηγορίας 1 (Tier 1) του Οµίλου µε ισχύ από την 1η Ιανουαρίου 2017, έχουν καθοριστεί σε 9,25% και 10,75% αντίστοιχα. Εκτός από τα πιο πάνω, η ΕΚΤ όρισε σε ενοποιηµένη βάση, καθοδήγηση κεφαλαίου για Πυλώνα ΙΙ (Pillar ΙΙ capital guidance), που πρέπει να πληρείται εξ’ ολοκλήρου από Κεφάλαιο Κοινών Μετοχών της Κατηγορίας 1 (CET 1). Οι νέες ελάχιστες κεφαλαιακές απαιτήσεις τέθηκαν σε ισχύ από την 1η Ιανουαρίου 2017.

Στρατηγικοί στόχοι και προοπτικές Με στόχο την επίτευξη των στρατηγικών της σχεδιασµών, η Ελληνική Τράπεζα παραµένει προσηλωµένη στη διατήρηση της ως ένα ισχυρό τραπεζικό ίδρυµα που θα ανταποκρίνεται στις προσδοκίες της οικονοµίας, της κοινωνίας, των επενδυτών και των µετόχων της. Kαθ' όλη τη διάρκεια της κρίσης, η Τράπεζα έχει διατηρήσει τη φήµη της για σταθερότητα και εµπιστοσύνη και επικεντρώνεται στην ενίσχυση και στην βελτίωση της θέσης της στην αγορά.

Η στρατηγική της Τράπεζας επικεντρώνεται σε δύο πτυχές: "αναδιοργάνωση" και "ανάπτυξη". Η πτυχή "αναδιοργάνωση" της στρατηγικής σχετίζεται κυρίως µε τη µείωση του υψηλού επιπέδου των ΜΕΧ. Η πτυχή "ανάπτυξη" της στρατηγικής αφορά την ανάπτυξη του δανειακού χαρτοφυλακίου µέσω νέου δανεισµού και την προώθηση και ενίσχυση των σχέσεων µε τους πελάτες. Η Τράπεζα προτίθεται να συνεχίσει να επιτελεί τον ρόλο της στην υποστήριξη της εγχώριας οικονοµίας διασφαλίζοντας παράλληλα την µετοχική της αξία µέσω συνετών πολιτικών που συµβαδίζουν µε το προφίλ κινδύνου του Οµίλου. Παράλληλα, η Τράπεζα επανατοποθετεί τη στρατηγική της για τον Τοµέα ∆ιεθνούς Τραπεζικής, αντικατοπτρίζοντας το µεταβαλλόµενο κανονιστικό περιβάλλον µε ιδιαίτερη έµφαση σε θέµατα ξεπλύµατος χρήµατος. Η στρατηγική της Τράπεζας, περιλαµβάνει επίσης την εξέλιξη στην τεχνολογία, τη βελτίωση της εξυπηρέτησης των πελατών και της απλούστευσης των διαδικασιών και διεργασιών. Η Τράπεζα, προχωρώντας σε αποφασιστικές ενέργειες για την αντιµετώπιση των προβληµατικών δανείων του

Οµίλου, έχει πωλήσει τις δραστηριότητες του τµήµατος ∆ιεύθυνσης ∆ιαχείρισης Καθυστερήσεων στην

νεοσύστατη εταιρεία, APS Debt Servicing Cyprus Ltd («APS Cyprus»), που είναι µέλος του οµίλου εταιρειών

APS Holding a.s. («APS Holding»). H Τράπεζα θα εξακολουθεί να διατηρεί στην ιδιοκτησία της τόσο τα ακίνητα

όσο και το χαρτοφυλάκιο των ΜΕΧ, τα οποία θα διαχειρίζεται µε τη σύστασή της η νέα εταιρεία. Η APS Cyprus

ανήκει κατά 51% στην APS Holding και κατά 49% στην Τράπεζα. Η µεταφορά της Επιχείρησης ολοκληρώθηκε

στις 30 Ιουνίου 2017 ενώ η APS Cyprus ξεκίνησε τις δραστηριότητές της την 3η Ιουλίου 2017.

Η συναλλαγή είναι συνυφασµένη µε την στρατηγική του Οµίλου για αντιµετώπιση του προβληµατικού

χαρτοφυλακίου και για ανάπτυξη των δραστηριοτήτων του µέσα σε ένα πλαίσιο συνετής διαχείρισης κινδύνων.

Περαιτέρω, συνάδει απόλυτα µε τις κατευθυντήριες γραµµές της Ευρωπαϊκής Κεντρικής Τράπεζας, του ∆ιεθνούς

Νοµισµατικού Ταµείου και της Ευρωπαϊκής Τράπεζας Ανασυγκρότησης και Ανάπτυξης για τη διαχείριση των

ΜΕΧ. Μέσω της δηµιουργίας της πρώτης πλατφόρµας διαχείρισης χρεών στην Κύπρο, η Τράπεζα θα είναι σε

θέση να αντιµετωπίσει αποτελεσµατικά τις ΜΕΧ µε γρηγορότερο ρυθµό και µε υψηλότερες ανακτήσεις,

αξιοποιώντας την τεχνογνωσία, την αποδεδειγµένη πραγµατογνωµοσύνη και τεχνική εµπειρία της APS Holding.

Η Τράπεζα θα είναι σε ισχυρότερη θέση να επικεντρώσει τους πόρους της στη διαχείριση και ανάπτυξη του

εξυπηρετούµενου δανειακού της χαρτοφυλακίου, αξιοποιώντας ευκαιρίες στην Κύπρο και στο εξωτερικό, καθώς

και στη συνέχιση του ψηφιακού µετασχηµατισµού, στη βελτιστοποίηση της εταιρικής διακυβέρνησης και στην

προσαρµογή στο εξελισσόµενο κανονιστικό περιβάλλον. Η ίδρυση της εταιρείας διαχείρισης χρεών αναµένεται

να διευκολύνει τον προσδιορισµό της τιµολόγησης των προβληµατικών δανείων και να βοηθήσει στην ανάπτυξη

αγοράς προβληµατικών περιουσιακών στοιχείων στην Κύπρο, προσελκύοντας ενδιαφέρον από διεθνείς

επενδυτές για τέτοια περιουσιακά στοιχεία και επιταχύνοντας τη διαχείριση των προβληµατικών δανείων.

Ως µέρος της υλοποίησης των στρατηγικών της στόχων, η Τράπεζα διατηρεί τον πρωταγωνιστικό της ρόλο για

την στήριξη της ανάκαµψης της οικονοµίας, υποστηρίζοντας τις αξιόχρεες κυπριακές επιχειρήσεις και τα

νοικοκυριά µε µια ολοκληρωµένη σειρά ποιοτικών τραπεζικών υπηρεσιών. H άνετη ρευστότητα που διαθέτει η

Τράπεζα, της επιτρέπει παράλληλα να εκµεταλλευτεί ευκαιρίες που παρουσιάζονται, µε κύριο στόχο την

οργανική ανάπτυξη. Η Τράπεζα εκτιµά ότι υπάρχουν δυνατότητες και προοπτικές σε διάφορους τοµείς της

οικονοµίας. Η επικέντρωση για νέο δανεισµό θα είναι σε εταιρείες που αυξάνουν την ανταγωνιστικότητα και την

παραγωγικότητα της χώρας, όπως στους τοµείς εµπορικών δραστηριοτήτων, µεταποίησης, τουρισµού, και στη

ναυτιλία στοχεύοντας συγκεκριµένα προφίλ πελατών. Παράλληλα, οι χορηγήσεις στον ιδιωτικό τοµέα θα

επικεντρώνονται στα στεγαστικά δάνεια, σε µικρά δάνεια σε νέους πελάτες και στη στήριξη υφιστάµενων

πελατών που θεωρούνται βιώσιµοι.

Με την επικέντρωση στις πρωτοβουλίες "αναδιοργάνωσης" και "ανάπτυξης" ο Όµιλος έχει όλα τα συστατικά για

την συνέχιση της εφαρµογής του στρατηγικού του πλάνου. Παρ’ όλο που το περιβάλλον παραµένει εύθραυστο

και ασταθές, η Τράπεζα θα συνεχίσει να επαγρυπνεί ώστε να µετατρέψει τις εξελίξεις σε ευκαιρίες τόσο στην

Κύπρο όσο και στο εξωτερικό.

Σηµειώσεις:

1. Οι συνοπτικές ενοποιηµένες οικονοµικές καταστάσεις για την περίοδο που έληξε στις 30 Ιουνίου 2017 δεν έχουν ελεγχθεί από τους εξωτερικούς ελεγκτές του Οµίλου.

2. Οι συνοπτικές ενοποιηµένες οικονοµικές καταστάσεις για την περίοδο που έληξε στις 30 Ιουνίου 2017 αποτελούνται από τις οικονοµικές καταστάσεις της Ελληνικής Τράπεζας ∆ηµόσιας Εταιρείας Λίµιτεδ και των θυγατρικών εταιρειών της που µαζί αναφέρονται ως ο Όµιλος.

3. Οι συνοπτικές ενοποιηµένες οικονοµικές καταστάσεις έχουν ετοιµαστεί σύµφωνα µε το ∆ιεθνές Λογιστικό Πρότυπο (∆ΛΠ) 34 «Ενδιάµεση Οικονοµική Πληροφόρηση» όπως αυτό υιοθετήθηκε από την Ευρωπαϊκή Ένωση και πρέπει να διαβάζονται σε συνάρτηση µε τις ελεγµένες ενοποιηµένες οικονοµικές καταστάσεις για το έτος που έληξε στις 31 ∆εκεµβρίου 2016.

4. Οι συνοπτικές ενοποιηµένες οικονοµικές καταστάσεις για την περίοδο που έληξε στις 30 Ιουνίου 2017

παρουσιάζονται σε Ευρώ, το οποίο είναι το κυρίως νόµισµα λειτουργίας της Τράπεζας που παρουσιάζει καλύτερα την ουσία των οικονοµικών πράξεων και δραστηριοτήτων των οντοτήτων του Οµίλου.

5. Τα συγκριτικά ποσά που περιλαµβάνονται στις συνοπτικές ενοποιηµένες οικονοµικές καταστάσεις για την περίοδο

που έληξε στις 30 Ιουνίου 2017 αναπροσαρµόστηκαν, όπου κρίθηκε αναγκαίο, για να συνάδουν µε τις αλλαγές στην παρουσίαση της τρέχουσας περιόδου.

6. Οι συνοπτικές ενοποιηµένες οικονοµικές καταστάσεις για την περίοδο που έληξε στις 30 Ιουνίου 2017 καθώς και

η παρουσίαση θα διατίθενται προς τους µετόχους και το κοινό στο Εγγεγραµµένο Γραφείο της Ελληνικής Τράπεζας ∆ηµόσιας Εταιρείας Λίµιτεδ στη Γωνία Λεωφ. Λεµεσού & Λεωφ. Αθαλάσσας 200, 2025 Στρόβολος, και έχουν αναρτηθεί στην ιστοσελίδα του Οµίλου www.hellenicbank.com (Σχέσεις Επενδυτών).

Documents

HELLENIC BANK GROUP - · PDF file3 HELLENIC BANK GROUP Condensed Consolidated Income Statement for the six-month period ended 30 June 2017 Six-month period ended 30 June Note