NBGIF National Bank of Greece SA (PK)

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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to rule 13a-16 or 15d-16 of

The Securities Exchange Act of 1934

For the month of August, 2018

National Bank of Greece S.A.

(Translation of registrant’s name into English)

86 Eolou Street, 10232 Athens, Greece

(Address of principal executive offices)

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]

Form 20-F        x          Form 40-F        o

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.]

Yes         o         No         x

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-           ]

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National Bank of Greece S.A.

Group and Bank

Six-Month Financial Report

30 June 2018

August 2018

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Certification of the Board of Directors

on the interim financial statements as at 30 June 2018

Certification of Chairman, Chief Executive Officer and a member of the Board of Directors

pursuant to Article 5 of Law 3556/07, as in force.

We, the members of the Board of Directors of National Bank of Greece S.A. certify that to the best of our knowledge:

(1)          The interim financial statements for the six-month period ended 30 June 2018 have been prepared in accordance with the current accounting standards and present a true and fair view of the Statement of Financial Position, Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement of the Bank and of the companies included in the consolidation.

(2)          The Board of Directors report for the 6-month period ended 30 June 2018 truly and fairly presents all information required by Article 5, Para 6 of Law 3556/07, as in force.

Athens, 31 August 2018

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Board of Directors Report

on the interim financial statements as at 30 June 2018

Developments regarding the Financial and Macroeconomic environment

The global economic recovery remains firm, although a number of factors continue to pose challenges

The global economy posted strong growth in the first half of 2018, albeit at a slower pace compared with the second half of 2017. Economic growth appears resilient but less even in different countries, with escalating trade concerns and increasing tariffs clouding the outlook for the global economy. More specifically, the slowdown of private consumption in the United States (“US”) was mainly responsible for weaker economic activity in the first quarter. However, the US economy has gathered momentum in the second quarter of the year on the back of rebounding consumer spending and sustained business investment growth, caused by continued labour market gains and expansionary fiscal policy. As a result, real Gross Domestic Product (“GDP”) increased by 2.7% six-month annualized rate in the first half of 2018 from 2.7% in the second half of 2017.

In the euro area, the economy continued to recover steadily, albeit slower than in the second half of 2017. Real GDP increased by 1.8% six-month annualized rate in the first half of 2018 from 2.9% in the second half of 2017. The contribution of private consumption remains significant, amid improving labour market conditions (unemployment rate at 8.3% in June 2018, a 9½ -year low level), and business investment continues to support economic activity, amid easy bank credit conditions. In Japan, economic growth decelerated significantly (real GDP +0.2% six-month annualized rate in the first half of 2018 from 1.9% in the second half of 2017), as private consumption lost steam. Accommodative monetary, and to a lesser extent fiscal, policy should continue to support growth close to potential of 0.5% to 1.0%. Finally, activity remained strong in China, with real GDP growth increasing by 6.8% year over year (“y-o-y”) on average in the first half of 2018 from 6.8% y-o-y in the second half of 2017.

At the start of 2018, equity markets initially edged higher as the US Tax Cuts and Jobs Act (“TCJA”) fuelled risk appetite further. However, the end of January 2018 saw a sudden surge in risk aversion due to a more aggressive reassessment of central banks’ interest rate tightening cycle amid inflationary pressures. Overstretched asset valuations and the termination of strategies that had been based on the continuation of low volatility, triggering stop-losses, amplified the sell-off. Equity market implied volatility surged, with the Chicago Board Options Exchange (“Cboe”) S&P500 Volatility Index (“VIX”) increasing to 37% in February and to 16% on average in the first half of the year, up from 11% in the second half of 2017. In addition, domestic political woes in Italy led to a sharp rise in the 10-Year yield spread over the German Bund (+79 basis points (“bps”) in the first half of 2018 to 238 bps as of 29 June). Nevertheless, investors’ concerns remained confined to Italy, as other Euro area periphery country bond spreads have declined compared with end 2017.

In all, financial markets ended the first half of 2018 on a mixed note (MSCI ACWI World: -1.5%, S&P500: +1.7%, EuroStoxx: -2.2% as of 29  June), while ongoing global trade tensions continue to dent investors’ risk appetite. At the same time, nominal government bond yields in major advanced economies have followed diverging paths (US Treasury 10-Year Yield: +46 bps to 2.86%, German 10-Year Bund Yield: -13 bps to 0.30%), whereas speculative grade corporate bond spreads widened significantly in the Euro area (+109 bps to 381 bps) as the European Central Bank (“ECB”) is expected to terminate its corporate bond purchases in 2018. Finally, the euro foreign exchange rate weakened by 2.7% against the US Dollar in the first half of the year, inter alia, due to lower nominal yields, a dovish ECB regarding interest rates and slightly elevated European political uncertainty. However, financial markets began the second half of 2018 (June 29 to August 21) on a positive note supported, inter alia, by robust corporate earnings growth (MSCI ACWI World: +2.4%, S&P500: +5.3%, EuroStoxx: +0.9%), while speculative grade corporate bond spreads have tightened (US: -13 bps to 348 bps, Euro area: -23 bps to 358 bps).

Monetary policies in advanced economies remain supportive, although the gradual removal of accommodation continued in the first half of 2018. The Federal Reserve (“Fed”) increased the target for the federal funds interest rate by a cumulative 50 bps to the range of 1.75%-2.0% as of July 2018, communicating further gradual interest rate increases going forward. The Fed began, in October 2017, to passively downsize its balance sheet reinvesting a portion, instead of the full amount, of principal payments from its holdings of Treasury and agency mortgage-backed securities that mature each month. On this side of the Atlantic, the ECB has kept its benchmark policy interest rates unchanged at 0.0% (main refinancing rate) and -0.4% (deposit facility rate) during the first half of 2018, and is expected to keep them at present levels “at least through the summer of 2019”. In addition, the ECB continued its asset purchase programme accumulating c. €215 billion of assets year-to-date (as of July 2018), albeit it announced (June 2018), that it expects to reduce the monthly pace of net purchases from €30 billion per month currently to €15 billion per month as of October 2018, and to end net asset purchases in December 2018 in view of achieved progress towards a Sustained Adjustment in the Path of Inflation (“SAPI”). The Bank of England (“BoE”) raised its benchmark policy rate by 25 bps to 0.75% in August 2018, communicating its intent to continue the “ongoing tightening of monetary policy” at a gradual pace and to a limited extent, conditional on an orderly “Brexit” transition. The BoE will likely continue to preserve some degree of monetary policy accommodation in the short term, through maintaining unchanged the amount of UK government bonds (£435 billion) and sterling non-financial investment grade corporate bonds (£10 billion) it currently holds on its balance sheet. Finally, the Bank of Japan (“BoJ”) continues the aggressive expansion of its balance sheet mainly through purchases of Government bonds and equity exchange-traded funds’ (“ETFs”). At the same time, the BoJ targets 10 year Japanese government bond yields to remain around zero percent under its “yield curve control” framework (albeit it raised the range of yield deviation it is willing to allow around the target from +/-10 bps to +/-20 bps) and introduced forward guidance for short-term policy rates “that are expected to remain at current negative/low levels for an extended period of time” in order to foster growth and achieve its inflation target of 2%.

The Greek economy returned to positive growth in 2017 and entered 2018 with the strongest pace in 10 years

After a slight decline of 0.3% y-o-y in real GDP (in constant prices) in 2016, GDP growth entered positive territory in 2017 (+1.3%, y-o-y), supported, mainly, by gross capital formation (14.9%, y-o-y, in the same period). This favourable momentum in GDP growth continued in

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Q1:2018, with GDP accelerating to 2.3% y-o-y (0.8% on a seasonally-adjusted quarterly basis), the strongest pace in 10 years. The main drivers of GDP growth in Q1:2018 were a strong increase in exports of goods and services (+7.6% y-o-y in constant price terms), in conjunction with a 2.8% y-o-y reduction in import spending, which cumulatively contributed 3.4 pps to annual GDP growth (Source: EL.STAT., Quarterly National Accounts Press Release, First Quarter, June 2018).

Deflation pressures receded, with the GDP deflator increasing by 0.6% y-o-y in 2017 and by 0.4% y-o-y in Q1:2018 (Source: EL.STAT., Quarterly National Accounts Press Release, First Quarter, June 2018). On the same note, the consumer price index increased by 1.1%, y-o-y in FY:2017, following an annual average decline of 1.2% between 2013 and 2016. Consumer prices stabilized in Q1:2018 (-0.1% y-o-y), while core inflation (which excludes the impact of energy and unprocessed fruit and vegetable prices) recorded a slight increase (0.2% y-o-y). Inflation showed a small acceleration to 0.5% y-o-y in Q2:2018 due to the significant increase in oil prices (38.3% y-o-y, in the same period). However, this increase has not affected core inflation (0.1% y-o-y in Q2:2018), possibly exemplifying a sustainable cost containment by Greek firms and the still limited pricing power in the domestic market (Sources: Bank of Greece, Bulletin of Conjunctural Indicators, May-June 2018, EL.STAT., Press Release, Consumer Price Index, June 2018 and Federal Reverse Bank Of St. Louis Economic data). In this respect, the negative impact from slightly higher inflation on household disposable income is estimated to be limited and offset by accelerating employment growth during the course of the year, as indicated by the increasingly positive net hiring flows recorded in the ERGANI system of the Ministry of Labour in July 2018.

A joint improvement in a significant number of coincident and economic confidence indicators during 7M:2018 suggests that economic activity is going to gain additional traction in the rest of the year. More specifically, manufacturing production increased by 1.9% y-o-y in 6M:2018, whereas the Economic Sentiment Indicator reached a 4-year high in July 2018 and the Purchasing Managers’ Index (“PMI”) remained clearly above 50 for a 14 th  consecutive month and stood at 53.5 in July 2018 (Sources: EL.STAT., Production Index in Industry, 2010=100.0, Press Release, June 2018, European Commission, Business and Consumer Surveys, June 2018, Bank of Greece, Bulletin of Conjunctural Indicators, May-June 2018 and Markit Economics, Press Releases, June 2017-July 2018). This trend is expected to be buoyed by the supportive impact on disposable income from the sustainable improvement in labor market conditions, falling country risk reflected in the significant improvement in sovereign debt valuations, following the successful completion of the fourth and last review of the third financial support program for Greece (the “Third Program”), the agreement on the implementation of a new set of debt measures and healthy export-oriented business activity and tourism. In this regard, tourism arrivals and receipts increased by 16.5% y-o-y and 23.1% y-o-y, respectively, in 5M:2018, and by 23.6% y-o-y and 36.8% y-o-y, respectively, in May 2018, while exports of goods excluding oil increased by 12.9% y-o-y in 5M:2018 (Sources: Bank of Greece, Developments in the Balance of Travel Services, Press Release, May 2018 and Bank of Greece, Balance of Payments, Press Release, May 2018).

Against this backdrop, real GDP growth is expected to reach 2.0%, y-o-y, on average, in 2018, according to the latest estimates of the International Monetary Fund (“IMF”) and the European Commission (Sources: IMF, World Economic Outlook, April 2018 and European Commission, Summer Forecast (Interim), July 2018). However, the recovery remains susceptible to downside risks related, inter alia , to the additional fiscal effort to meet the medium term fiscal targets, a very gradual improvement in domestic liquidity conditions and the still vulnerable financial position of a significant number of business entities and households, following the multiyear crisis. Adverse external factors affecting export demand or a tightening in financial and monetary conditions internationally could weigh on Greece’s economic performance.

Residential construction increased by 10.7% y-o-y in Q1:2018, following a decline of 8.7% y-o-y in 2017, according to the relevant national accounts data (Source: EL.STAT., Quarterly Gross fixed capital formation by Asset, Chain-linked volumes, reference year 2010, First Quarter 2018, June 2018), posting its first annual expansion in a decade and, potentially, signalling the end of the longest adjustment cycle in the market. House prices in Greece increased by 0.8% y-o-y (0.7% q-o-q) in Q2:2018 and by, an upwardly revised, 0.1% y-o-y in Q1:2018, for the first time in 10 years, responding gradually to improving macroeconomic conditions. Positive annual growth is recorded in all market segments (new and old apartments) and regions, with the Athens area outperforming the market average (1.2% y-o-y in Q2:2018 and 0.4% y-o-y in Q1:2018), possibly, supported by a pick-up in demand for premium properties and tourism-related demand (Source: Bank of Greece, Real Estate statistics). In this vein, prices of prime commercial spaces (retail & offices) increased by 3.0%, y-o-y, on average, in H2:2017 (latest available data, Source: Bank of Greece, Bulletin of Conjunctural Indicators, May-June 2018). Elevated tax pressure, liquidity factors and the still high oversupply are likely to continue weighing on the recovery process in the residential market. Furthermore, the operation of a web-based auction platform since January 2018 contributed to a speeding up of foreclosures, which does not appear to have intensified the pressure on prices in Q1:2018 since banks’ participation in some of these operations mitigated the downside pressure on prices mainly through a signalling effect. Moreover, the above developments, along with the finalization of the first round of revisions in the zonal values of property used for tax purposes with relatively small changes, reduced uncertainty and possibly mobilized new demand, from potential buyers (including foreigners).

The improvement in the Greek labor market continued in the 5M:2018, with employment increasing by 1.5% y-o-y following an increase of 2.2% y-o-y in 2017, showing a close correlation to economic activity. The unemployment rate declined further to a 6½-year low of 19.5% in May 2018 from 20.8% in December 2017 and 23.4% in December 2016 (Source: EL.STAT., Press Releases, Labor Force Survey, Monthly Data, December 2016, January-December 2017 and January-May 2018). Forward looking indicators of employment creation in the wage earners segment, along with survey data on employment prospects in key business sectors, point to a further increase in employment creation in the following quarters of 2018 (Sources: Ministry of Labour, ERGANI, July 2018, European Commission, Business and Consumer Surveys, June 2018 and NBG estimates).

In 2017, the current account showed a small deficit (-0.8% of GDP, compared to -1.1% of GDP in 2016). However, strong business demand for productive inputs, as business activity gains further traction and investment recovers, along with higher energy prices and higher spending on imported services, are likely to lead to a widening in the current account deficit in 2018. Indeed, in the 5M:2018 the current account balance recorded a deficit of 2.2% of GDP, remaining flat compared with 5M:2017, as the higher trade deficit (-0.1% of GDP) —

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due to the increase in imports of goods — has been offset by the higher services surplus and, mainly, by the higher travel balance, which reflects the strong momentum of tourism activity (Sources: Bank of Greece, Balance of Payments Statistics & NBG estimates).

The Greek banking system remained in deleveraging mode with credit to the private sector declining by 1.2% y-o-y in June 2018 from -0.8% y-o-y in December 2017. The small acceleration mainly reflects a higher pace of contraction of corporate credit by -0.4% y-o-y in June 2018 from an increase of 0.4% y-o-y in December 2017. Furthermore, loans to corporations of specific sectors, such as tourism and manufacturing , increased in June 2018 (3.1% y-o-y and 1.0% y-o-y, respectively). Loans to households declined by -2.1% y-o-y in June 2018 from -2.3% y-o-y in December 2017, with mortgage credit contracting by -3.0% y-o-y and consumer credit by -0.6% y-o-y in June 2018, at a broadly similar pace with December 2017. Domestic private sector deposits increased by €5.7 billion, cumulatively, in 2017 — reaching €126.3 billion — and by €2.9 billion in H1:2018 (at €129.4 billion), with household deposits contributing €1.8 billion and corporate deposits contributing €1.1 billion in the H1:2018 increase, reflecting, inter alia , the improvement of economic activity, a pick-up in export oriented activities and supportive trends in net external capital inflows in the form of portfolio investment and foreign direct investment during 2017 and in the first half of 2018 (Source: Bank of Greece, Monetary and Banking Statistics and Balance of Payments Press Release, December 2017 and June 2018). Accordingly, the Greek banking system’s financing from the Eurosystem (including the Emergency Liquidity Assistance (“ELA”)) decreased to €13.0 billion in July 2018, from €33.7 billion in December 2017, and by €113.6 billion cumulatively since its peak in June 2015, with ELA dependence contracting by €81.9 billion in this period (from €86.8 billion in June 2015 to €4.8 billion in July 2018) (Source: Bank of Greece, Monthly Balance Sheet, June 2015, December 2017 and July 2018), also assisted by the sales of European Financial Stability Facility (“EFSF”) bonds used for recapitalization and further deleveraging, which contributed to a reduction of the banking system’s funding gap (Source: Bank of Greece, Overview of the Greek Financial System, May 2018, in Greek).

On the fiscal front, Greece overperformed its fiscal targets in 2017, for a third consecutive year, reaching a primary surplus of 4.2% of GDP, against the Third Program target of 1.75% of GDP (Source: EL.STAT., Press Release, Fiscal data for the years 2014-2017, 1 st  Notification, April 2018). European institutions also project that Greece appears capable to meet the General government primary surplus target of 3.5% of GDP in 2018 (Sources: European Commission, Compliance Report, European Stability Mechanism “ESM” Stability Support Programme for Greece, Fourth Review, June 2018 and Ministry of Finance, Medium Term Fiscal Strategy 2019-2022 (“MTFS 2019-2022”), June 2018) with State budget implementation trends in 6M:2018 exceeding the respective MTFS 2019-2022 targets. Indeed, according to State budget implementation data, Greece recorded a primary surplus of 0.3% of GDP in 6M:2018, which exceeded the respective budget target for a deficit of 0.3% of GDP in the same period, by 0.6 pp of GDP, indicating that Greece remains on track to meet the annual fiscal targets (Source: Ministry of Finance, State Budget Execution Monthly Bulletin, June 2018). With a view to reinforce Greece’s long-term fiscal sustainability, the Greek government pre-legislated a new set of fiscal and structural policies in May and June 2017 — comprising income tax reform and a new round of interventions in the pension system — which are planned to take effect in 2019-2020. These policies, alongside with other prior actions that were required for the completion of the fourth — and last — review of the Third Program, were further codified and approved by the Greek parliament in the context of a multi-bill on 14 June 2018. The multi-bill included, also, the MTFS 2019-2022, which, besides the fiscal measures required for the achievement of the primary balance targets for this period, provides for the possibility of activation of some offsetting expansionary measures in the event of a fiscal overperformance in these years. The expansionary measures are planned to include, inter alia , a targeted reduction in tax burden of up to 1.0% of GDP and spending increases up to 0.9% of GDP in the form of social transfers, active labor market policies and public investment (Source: Ministry of Finance, MTFS 2019-2022, June 2018).

The General government debt-to-GDP ratio reached 180.8% in 2016 and declined to 178.6% in 2017. According to the European Commission’s Debt Sustainability Analysis (“DSA”) of 23 June 2018, the stock of gross debt is estimated to follow a declining trend from 2019 onwards, showing a peak in 2018, due to the pre-emptive accumulation of a cash buffer of the Greek state ahead of the completion of the Third Program. On the same note, the DSA conducted by the IMF on 31 July 2018, indicates that the debt-to-GDP ratio will remain on a downward path until 2038, while gross financing needs (“GFNs”) as percent of GDP will remain below the threshold of 20% until this year. However, the future dynamics of the public debt remain conditional to the pace of GDP growth in the long run and the achievement of fiscal targets for a primary surplus of 2.2% of GDP in 2023-2060 (Source: EL.STAT., Press Release, Fiscal data for the years 2014-2017, 1 st  Notification, April 2018, European Commission, Compliance Report, ESM Stability Support Programme for Greece, Fourth Review, June 2018 and IMF, Country Report No. 18/248, Greece Article IV, July 2018).

Regarding the potential for a gradual restoration of the Hellenic Republic’s access to market financing, there was further progress in the first months of 2018, following the five-year benchmark bond issuance and the successful swap of PSI bonds in 2017. In this respect, Greece launched a €30 billion debt swap, which was successfully completed on 29 November 2017, with €25.5 billion of PSI bonds being exchanged, i.e., a participation rate of c. 86%, for five new benchmark issues, maturing between 2023 and 2042 and with coupons ranging from 3.5% to 4.2%. On 8 February 2018, the Hellenic Republic issued, through syndication, a new seven-year benchmark bond, raising €3.0 billion at a re-offer yield of 3.5% (Source: Athens Exchange (the “ATHEX”), Press Release “Hellenic Republic — Press points for 7year new GGB”, 8 February 2018). On 14 March 2018, Greece successfully auctioned a 12-month Treasury bill issue — the first issuance of this type since 2010 — raising €1.0 billion, with interest rate set at 1.25%, while on 13 June 2018 another Greek 12-month Treasury bill was successfully auctioned, with interest rate set at 1.09% (Source: Public Debt Management Agency, Announcement on the Auction results of 52 week T-bills, 14 March 2018 and 13 June 2018).

The effective completion of the final review of the Third Program, in conjunction with the decision by the Eurogroup of 21 June 2018 regarding the implementation of additional measures to ensure debt sustainability, have been accompanied by a decline in 10-year Greek bond yields, with their yield falling to 3.9% in early-July 2018 from 4.9% in early-December 2017, while short-term Greek bond yields recorded an even more significant compression, due to the significant lowering of Greece’s debt servicing costs in 2019-2032 and the existence of a sizeable cash buffer for debt servicing (Source: Bloomberg). Nevertheless, as indicated by the volatility in Greek bond valuations in Q2:2018 and in July-August 2018, in response to the economic turbulence in Italy and Turkey, as well as the concomitant

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deterioration in peripheral bond markets, the Greek bond market remains very sensitive to fluctuations in international financial markets and risk premia internationally (especially those affecting euro area countries with larger fiscal and/or financial imbalances).

Regarding the progress in the Third Program implementation and the disbursements of related financing, the Hellenic Republic, by implementing the policy measures agreed with official lenders, received €40.2 billion of Third Program financing between August 2015 and October 2017 successfully completing two reviews of the Third Program. From this financing €29.3 billion have been used for debt servicing purposes, €5.4 billion for bank recapitalization purposes and €5.5 billion for arrears clearance.

Regarding the progress in Third Program implementation in 2018, following the staff level agreement on the policy package that had been presented to the Eurogroup of 4 December 2017, the Eurogroup of 22 January 2018 welcomed the implementation of almost all of the agreed prior actions necessary for the completion of the third review. The Eurogroup called on the Greek authorities to complete the outstanding prior actions by February 2018 and reconfirmed the importance of an ambitious comprehensive growth strategy with strong ownership from the Greek authorities for ensuring Greece’s long-term economic and fiscal sustainability. The Eurogroup confirmed the beginning of technical work by the Euro Working Group on the growth-adjustment mechanism, as part of the medium-term debt relief measures to be implemented, if needed, following the successful conclusion of the Third Program, in line with the agreement in the Eurogroup of 15 June 2017. The Eurogroup invited the European institutions and the IMF to take into account the holistic Greek growth strategy when updating the DSA (Source: Eurogroup Statement on Greece, 22 January 2018). In 12 March 2018, the Eurogroup commended Greece for completing the third review and approved the release of the fourth tranche of €6.7 billion, programmed to be paid in two instalments. The first one was disbursed on 28 March 2018, amounting to €5.7 billion, of which €3.3 billion was disbursed for debt servicing needs, €1.5 billion for arrears clearance and €1.9 billion for the formation of the cash buffer (Source: ESM, Press Release, 27 March 2018). The second instalment of €1.0 billion was released on 14 June 2018, following the positive assessment by the European Institutions regarding the clearance of net arrears by the Greek Government, as well as the effectiveness of the web-based auctions system (Source: ESM, Press Release, 14 June 2018).

On 24 May 2018, the Eurogroup welcomed the staff-level agreement (“SLA”) with the Greek government and mandated the Institutions to prepare a final DSA under the Third Program. Greece, in line with its commitments to the official lenders, has also prepared a document describing its long-term growth strategy, which has been presented by the Greek Minister in the Eurogroup of 27 April 2018. This document contained key elements of growth and efficiency enhancing reforms in priority areas for economic policy, with a view to increase the country’s comparative advantages and overcome the shortfalls created by the crisis (Source: Eurogroup, Press Release, “Remarks by M. Centeno following the Eurogroup meeting of 24 May 2018”).

The DSA, published on 23 June 2018, has been taken into account by the Eurogroup of 21 June 2018, which decided on the implementation of a new set of debt relief measures for the medium term (Source: European Commission, Compliance Report, ESM Stability Support Programme for Greece, Fourth Review, June 2018). Moreover, on 21 June 2018 the Eurogroup confirmed the successful conclusion of the fourth review endorsed the successful completion of the Third Program and welcomed the commitment of the Greek authorities to continue and complete all key reforms adopted under the Third Program. In addition, the Eurogroup approved the release of the fifth and last tranche of the Third Program amounting to €15.0 billion, out of which €5.5 billion will be disbursed to the segregated account for short-term debt servicing needs and €9.5 billion will be disbursed to increase the Hellenic Republic’s cash buffer to c. €24.1 billion, which is sufficient to cover, if necessary, sovereign financing needs over, at least, a two-year period following the end of the Third Program in August 2018 (Source: Eurogroup Statement, 22 June 2018). On 6 August 2018, the ESM Board of directors approved the disbursement of this fifth and last tranche of €15.0 billion — following the completion of the relevant national procedures (Source: ESM, Press Release, 6 August 2018).

Regarding the public debt sustainability issue, the Eurogroup of 25 May 2016 had been initially committed to provide new conditional concessions with a view to ensuring debt sustainability by agreeing on a package of debt measures, which would be phased in progressively and will be subject to the pre-defined conditionality under the Third Program (Source: Eurogroup Statement on Greece, 25 May 2016). This Eurogroup also agreed to establish a benchmark for assessing sustainability of the Greek debt, based on the Hellenic Republic’s annual gross GFNs related to the servicing costs of the Hellenic Republic’s total debt. The Eurogroup statement had foreseen a sequenced approach, whereby a package of debt measures could be phased in progressively, if this was deemed necessary by the official lenders to meet the agreed benchmark on gross financing needs and subject to the pre-defined conditionality. In this context, the Eurogroup of 9 May 2016 outlined the following general guiding principles for a potential provision of additional relief in Greece’s public debt servicing burden: (a) facilitating market access; (b) smoothing the repayment profile; (c) incentivizing the country’s adjustment process even after the Third Program ends and (d) flexibility to accommodate uncertain GDP growth and interest rate developments in the future. These debt-servicing relief measures have been planned to include, inter alia , a smoothening of payment profiles and design of other debt-management and re-profiling measures in the short, medium and long-run aiming at extending further the effective maturities, lower the medium-to-longer-term debt servicing costs and effectively reduce the net present value of the outstanding Greek debt (Sources: Eurogroup Statement, 9 May 2016 and 25 May 2016). The Eurogroup of 5 December 2016 endorsed the implementation since early 2017 of a first set of short-term debt relief measures agreed in principle in the Eurogroup meetings of 9 May and 25 May 2016 (Source: Eurogroup Statement, 5 December 2016).

The Eurogroup of 15 June 2017 repeated the assessment of debt sustainability on the basis of GFNs, following a partial implementation of the short-term debt relief measures that started since early 2017 and stated that it stands ready to implement a second set of debt measures to the extent needed to meet the GFNs objectives (Source: Eurogroup Statement, 15 June 2017).

In the context of Eurogroup decisions referred to above, the most part of short-term measures has been implemented in 2017 (involving, inter alia , a smoothening of the EFSF repayment profile and the exchange of the floating rate notes held by Greek banks with long-term fixed rate notes). On 24 May 2018, the Eurogroup mandated the Institutions to produce a final DSA, in order to ensure the long-term

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sustainability of the Greek debt and a package of debt relief measures to be implemented, if needed, at the end of the Third Program (Source: Eurogroup, Press Release, “Remarks by M. Centeno following the Eurogroup meeting of 24 May 2018”).

In this context, the Eurogroup of 21 June 2018 agreed to implement the following medium-term debt measures to ensure that GFNs remain below 15% of GDP in the medium term and below 20% of GDP in the long term and that the gross public debt will remain on a downward path. This new set of medium-term measures includes the abolition of the step-up interest rate margin related to the debt buy-back tranche of a part of the PSI bonds, as of 2018, the use of 2014 SMP profits from the ESM segregated account and the restoration of the transfer of ANFA and SMP income equivalent amounts to Greece (as of budget year 2017) and a further deferral of EFSF interest and amortization on €96.9 billion of EFSF by ten years along with an extension of the maximum weighted average maturity (“WAM”) of these loans by 10 years. Debt sustainability is planned to be reviewed at the end of the extended grace period on the specific part of the EFSF loans in 2032, permitting Eurogroup to assess whether additional debt measures are needed to ensure debt sustainability. On this matter, the Eurogroup members stated that they are going to take into account a positive assessment of Greece’s post-program surveillance record, particularly in the fiscal area and economic reform policies (Source: Eurogroup Statement, 22 June 2018 and ESM, Remarks by Klaus Regling, Press conference after Eurogroup meeting, 22 June 2018).

According to the DSA estimates of 23 June 2018, the long term debt ratio as percent of GDP is estimated to be substantially improved by the implementation of the medium-term measures, agreed in the Eurogroup of 21 June 2018. These measures are estimated to reduce gross debt as percent of GDP to 116.9% in 2040 and to 96.8% in 2060 (or about 30% of GDP lower than the respective estimate without the implementation of the medium-term measures by 2060), whereas to maintain GFNs to below the agreed thresholds in the medium and the long term. However, the developments in GFNs in the long run remain sensitive to the macroeconomic assumptions. To this end, the Eurogroup of 21 June 2018 stated that the official lenders are committed to reassessing Greece’s debt sustainability in the future and implement debt relief measures, if needed (Sources: Eurogroup Statement, 22 June 2018 and European Commission, Compliance Report, ESM Stability Support Programme for Greece, Fourth Review, June 2018). Moreover, for the long run, the Eurogroup recalled the agreement that had been reached in the Eurogroup of May 2016, on a contingency mechanism on debt that could be activated in the case of an unexpectedly more adverse macroeconomic scenario, adjusting debt servicing costs to more sustainable levels if required and decided by the Eurogroup (Source: Eurogroup Statement, 22 June 2018).

The above positive developments for debt sustainability, along with the agreement on the decision on the implementation of an enhanced framework for Greece’s post program monitoring following the Third Program completion (see below “ Post-program surveillance ”), the additional progress in fiscal consolidation and the pick-up in economic activity, led major rating agencies to upgrade and/or maintain a positive stance as regards the Hellenic republic’s future rating in 2018. On 19 January 2018 and on 16 February 2018, S&P Ratings and Fitch Global Ratings upgraded, respectively, Greece’s sovereign bond rating to ‘B’ from ‘B-’, while on 21 February 2018, Moody’s upgraded Greece’s sovereign rating by two notches to ‘B3’ from ‘Caa2’, citing improvements in growth and fiscal outlook as the main drivers of their decision. Moreover, all major rating agencies maintained a positive outlook on Greece referring to a potential for rating upgrades in 2018 and 2019, if the improvement in macroeconomic trends, the additional targeted progress in fiscal adjustment and the scenario of a successful completion of the Third Program materialize. The successful build-up of a sovereign liquidity buffer in order to pre-finance future government debt repayments upon the country’s exit from the Third Program has been referred to as an additional factor which has been taken into account in assessing Greece’s creditworthiness.

In this context, on 25 June 2018, S&P Ratings further upgraded Greece’s sovereign bond rating to “B+” from “B”, revising its outlook from positive to stable, on the back of the 21 June Eurogroup’s decision on debt, which is estimated by the S&P to minimize sovereign debt servicing risks over the next two years. Moreover, on 20 July 2018, S&P reset its outlook on the Hellenic Republic’s rating to positive. Furthermore, on 10 August 2018, Fitch Global Ratings upgraded Greece’s sovereign bond rating by two notches, to “BB-” from “B”, with a stable outlook, bringing the country’s long-term sovereign rating three notches away from an investment grade rating. Positive trends in Greek sovereign risk and valuation have also impacted the risk assessment of the Greek private sector, in a positive way. On 3 July 2018, S&P upgraded the long- and short-term issuer credit on the four Greek systemic banks to “B-/B” from “CCC+/C”, referring to the improving liquidity conditions and the growing capacity of the banks to sustain financial commitments and improve their balance sheets on the long run, whereas Moody’s upgraded its outlook for the Greek banking sector to positive on 30 July 2018. Furthermore, on 6 July 2018, an investment grade “BBB-” rating (that is, 4 notches above the respective Greece’s sovereign rating by S&P) has been assigned to National Bank of Greece’s “pass through covered bond program” (Source: S&P press releases). Nonetheless, the rating agencies also refer that the Hellenic Republic’s rating could be adversely affected in the event of re-appearance of doubts about the country’s commitment to maintain a sound fiscal position and implement important reforms agreed under the Third Program or meet other obligations of the post-program monitoring (Source: S&P, Fitch and Moody’s press releases on Greek Sovereign outlook).

Post-program surveillance

On 20 August 2018, Greece officially concluded the Third Program, receiving in total €61.9 billion by the ESM between August 2015 and August 2018 in support of macroeconomic adjustment and bank recapitalisation, whereas the remaining €24.1 billion available out of total Third Program financing envelope of up to €86 billion was not needed. The successful completion of the Third Program, following the implementation of a significant range of economic reforms and the achievement of a credible fiscal adjustment, marked the exit of Greece from an official financial support program for the first time since 2010 and has been accompanied by the provision of a new set of medium-term debt relief measures. As Mario Centeno, the Chairperson of the ESM Board of Governors and the Eurogroup President, stated “this was possible thanks to the extraordinary effort of the Greek people, the good cooperation with the current Greek government and the support of European partners through loans and debt relief”. However, to ensure Greece’s reliability, the country has to build upon the progress achieved by continuing the reforms launched under the Third Program (Source: ESM, Press Release, 20 August 2018).

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Following the successful completion of the Third Program and the commitment of the Greek authorities to continue and complete all key reforms adopted under the Third Program, Greece will be subject to a post-program monitoring framework, which will be based on an “Enhanced Surveillance Procedure” directed by the European Commission (Source: Annex of the Eurogroup of 22 June 2018: Specific commitments to ensure the continuity and completion of reforms adopted under the ESM programme). Indeed, on 11 July 2018, following the preceding Eurogroup agreement, the European Commission, adopted the decision on the activation of enhanced surveillance for Greece, under Article 2(1) of the EU Regulation 472/2013 for a renewable period of six months. This framework is going to enter into force after the expiration of the ESM programme on 20 August 2018. This enhanced surveillance framework has been designed to support the completion, delivery and continuity of reforms Greece has committed to implementing under the ESM programme, to ensure a smooth transition of the economy to economic normality and maintain a high degree of credibility (Source: European Commission, Commission Implementing Decision of 11 July 2018 on the activation of enhanced surveillance for Greece). These remaining reforms concern fiscal efficiency and other structural policies, social welfare, financial stability, labor and product markets, privatization and public administration. Moreover, the country has been committed to maintain a primary surplus of 3.5% of GDP until 2022 and 2.2% of GDP, on average, in the period 2023-2060, ensuring that its overall fiscal performance remains in line with the EU fiscal framework. Another commitment is related to real estate property valuations. The government has been committed to undertaking, by mid-2019 and mid-2020, nationwide valuation exercises of property tax value based on market values, as well as, to update property tax values for ENFIA and other taxes fully in line with market values by mid-2020 (Source: Eurogroup Statement, 22 June 2018 and Annex: Specific commitments to ensure the continuity and completion of reforms adopted under the ESM programme).

This surveillance framework entails quarterly reports that assess the economic, fiscal and financial situation along with the implementation of the post-program policy commitments and will serve as a basis for the Eurogroup to agree, inter alia , on the implementation of some of the debt relief measures. This surveillance will be supplemented by the ESM’s “early warning system” for assessing fiscal imbalances, while the IMF is expected to remain engaged in the new monitoring framework, the same way it has been engaged in other similar cases of euro area countries that exited a financial support program. Specifically, Greece will be subject to I MF reporting twice a year under the Article IV consultation process and the IMF will provide technical assistance in the process of post-program monitoring in cooperation with the European Institutions (Sources: Eurogroup Statement, 22 June 2018 and IMF, Transcript of IMF Press Briefing with Gerry Rice, 28 June 2018 and European Commission, Fact Sheet, Memo on enhanced surveillance in Greece, 11 July 2018, Comments by Peter Dohlman following the publication of the Article IV, 31 July 2018).

Finally, the Eurogroup of 21 June 2018 welcomed the signature of a ‘Cooperation and Support Plan’ between the Greek authorities and the European Commission’s Structural Reform Support Services (“SRSS”), which provides the continued provision of technical assistance to support reform implementation in the coming years (Source: Eurogroup Statement, 22 June 2018).

The Macroeconomic Environment and the Banking Services Sector in South Eastern Europe operations (“SEE operations”, comprising FYROM and Romania)(1)

The economies and banking sectors of SEE operations performed relatively well in the first half of this year.

GDP growth in SEE operations is estimated to have reached 3.9% year over year in the first half of 2018 — 1.6 pps higher than that in EU-28 — supported by both domestic and external demand. Private consumption remained the main engine of growth, mainly underpinned by improving labour market conditions, strengthening retail lending activity and loosening fiscal policy stance. On the other hand, exports of goods and services maintained momentum, despite a temporary deceleration in economic activity in SEE operations’s main trading partner - the euro area.

Not surprisingly, despite strong exports, the current account deficit in SEE operations reached a multi-quarter high, though manageable, of 3.3% of GDP, on a fourth quarter rolling basis, in the second quarter of 2018, due to buoyant domestic demand and, to a lesser extent, unfavourable global oil prices. Encouragingly, the quality of financing of the current account deficit remained sound. Indeed, non-debt generating foreign direct investments covered the bulk of the current account deficit (80.4%, on a fourth quarter basis, in the second quarter of 2018).

Amid a favourable operating environment, the fundamentals and the performance of the SEE operations banking sector continued to improve. Indeed, year-to-date released figures show that SEE operations’ banking sector bottom line rose to an estimated €1,733 million (annualised) in the first quarter of 2018 from €1,196 million (annualised) in the same period a year earlier and €1,268 million in full-year 2017. This performance was largely underpinned by lower provisions for bad loans, in line with the moderation of the ratio of problematic loans to total gross loans (to 5.1% and 6.2% in FYROM and Romania, respectively, at end-March 2018 from 6.4% and 9.4% a year earlier). The downward trend in the non-performing loans reflects strong economic activity and, to a large extent, significant write-offs and sales of problematic loans encouraged by Central Banks. Moreover, the capital adequacy ratio remained sound (ranging between 16.4% in FYROM and 19.8% in Romania at end-March 2018). The improved asset quality and solvency bode well for a strong rebound in lending activity in the near future, in view of SEE operations’s low penetration rate (total loans-to-GDP ratios ranged between 26.3% in Romania and 47.8% in FYROM in June 2018), especially in the retail segment (retail lending-to-GDP ratios ranged between 14.3% in Romania and 23.7% in FYROM in June 2018) and ample liquidity (the SEE operations average loan-to-deposit ratio stood at 80.6% in June 2018).

(1) Source: Published data from the Central Banks and the National Statistical Agencies of the related countries and processed by NBG. The SEE operations weighted averages are based on NBG estimates of nominal EUR GDP in each country.

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The positive macroeconomic and banking sector performance in SEE operations is expected to continue during the rest of the year despite strong external headwinds.

Despite tightening global liquidity conditions and unfavourable global oil prices, we see SEE operations’s full-year 2018 economic expansion at 4.3%. The robust growth performance this year should also reflect supportive base effects stemming from the stagnation of economic activity in FYROM, due to protracted political uncertainty in the first five months of 2017.

There are, however, downside risks to the SEE operations positive outlook, stemming mainly from tighter-than-anticipated global liquidity conditions and weaker-than-expected economic activity in the region’s main trading, investing and financing partner — the euro area. Indeed, stronger-than-expected growth momentum or inflation in the U.S. could prompt the Fed to proceed with a faster or stronger monetary tightening than currently anticipated. Moreover, increased protectionism by the U.S. administration could create negative effects on the rest of the world growth - including the euro area.

Anticipated developments (risk and uncertainties)

Looking forward in 2018, the growth rate of the global economy is expected to pick up pace to 3.9% y-o-y (according to IMF World Economic Outlook, July 2018) from 3.7% y-o-y in 2017. However, there are downside risks surrounding the outlook. In detail, tighter global financial market conditions — possibly triggered by a reassessment of the US Federal Reserve interest rate tightening cycle - could result in rising risk premia across major asset classes leading to heightening financial market volatility and could spill over to the real economy. Noticeable stress in European banks amid unresolved legacy issues (e.g. non-performing exposures) and weak profitability could reignite the euro area sovereign cum banking crisis. In parallel, European political uncertainty could resurface (Italy). In addition, as EU/UK negotiations culminate ahead of March 2019, any political strains in the UK will likely focus investors’ attention in the second half of 2018, in case of a “hard Brexit”.

Moreover, a rising protectionism sentiment and/or a rapidly escalating trading clash between major economies (US, China, European Union) could hurt business investment, global trade, growth prospects and financial markets, while political and geopolitical risks (North Korea, Middle East, Ukraine/Russian clash) could derail the global recovery. Finally, in China, authorities’ efforts to address financial risks and curb excess credit could result to a sharper than expected slowdown of the Chinese economy that could bear negative repercussions in both emerging and advanced economies through confidence and currency channels, commodity prices, as well as global trade.

Regarding Greece, the official projections for a healthy economic recovery in 2018 of 2.0% y-o-y, on average, (Sources: EU Commission Summer Forecast (Interim), July 2018 and IMF, World Economic Outlook, April 2018) continue to be subject to downside risks related to the continuing fiscal effort to maintain a targeted primary surplus of 3.5% of GDP in 2018-2022 (Source: Memorandum of Understanding, 19 August 2015) and the uncertainties regarding the path of transition to economic normality, following the end of the Third Program.

The baseline scenario for a sustainable healthy recovery is expected to be supported by: i) improving sentiment, due to the successful completion of the Third Program, which will support private sector spending and investment decisions; ii) positive tourism contribution, as indicated by the current momentum in tourism revenue (23.1%, y-o-y, in the 5M:2018 and 36.8 % y-o-y in May 2018 — the strongest pace since April 2014, Source: Bank of Greece, Developments in the Balance of Travel Services, Press Release, May 2018) and favourable prospects for the core months of the tourism season of 2018; iii) improving trends in goods’ exports (12.9%, y-o-y, excluding oil products, in 5M:2018, Source: Bank of Greece, Balance of Payments, Press Release, May 2018) and steadily positive trends in export orders in the Q2:2018 (Source: Bank of Greece, Bulletin of Conjunctural Indicators, May-June 2018), supported by the still healthy GDP growth in the euro area; iv) accelerating public investment activity during the course of 2018, following the lower-than-budgeted disbursements of the Public Investment Budget (“PIB”) programme in 6M:2018; v) a further normalization of liquidity conditions (reflecting, inter alia , additional progress in the clearance of government arrears and improving labor market conditions) and an acceleration in portfolio and foreign direct investment inflows, which has already become evident in 2017 and continued in early-2018 and vi) a further easing of capital controls.

Most of the above developments are supportive of an acceleration in GDP growth in 2018, however, medium term growth prospects, the pace of improvement in the private sector financial position — especially of households and less competitive enterprises — and liquidity conditions, as well as, the exact timeline for fully lifting capital controls, remain uncertain. External factors related to the risk of a deterioration in financial or broader macroeconomic conditions in the euro area or globally, geopolitical risks and/or a further appreciation in energy prices, as well as, tensions related to Italy, which could involve an adverse reassessment of the sovereign risk in the euro area, could weigh on fixed income and equity market conditions and, hence, could create considerable downside risks for domestic spending and Greek asset valuations adversely affecting Greece’s economic performance and conditions in the financial sector. Additional uncertainties, related to the increase in economic volatility internationally, due to, inter alia , deteriorating economic conditions in Turkey — which corresponds to a key exporting market for Greece and a major competitor for Greece’s tourism sector and goods exports to the EU — accompanied by a sharp devaluation in Turkish lira, increasing tensions in international trade originating from US’s revisionist approach to the existing international trade agreements, with a possible negative impact on euro area GDP growth, could affect Greece’s economic performance along with sovereign, banking and other private sector’s risk premia in the euro periphery.

Moreover, there are still risks relating, inter alia , to Greece’s short and longer term potential growth prospects, the sustainability of fiscal performance in longer time horizon without an additional cost to long-term growth potential, as well as, developments in global financial markets and the cost of risk internationally. Accordingly, the magnitude and timing of the potential confidence, liquidity and other macroeconomic benefits related to the provision of additional debt relief to Greece, following the successful completion of the Third Program, are difficult to gauge and may be less than anticipated or take considerable time to show. In addition, the financial positions of households and of a significant number of less competitive business units remain weak, imposing considerable challenges to the Greek banks’ strategies for reducing the non-performing exposures and could slow the pace of improvement of liquidity conditions, weighing on the banking system’s performance.

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The lifting of the ECB’s waiver on Greek assets following the completion of the Third Program (Source: ECB, Legal Act, “Decision (EU) 2018/1148 of the ECB of 10 August 2018 on the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic and repealing Decision (EU) 2016/1041 (ECB/2018/21)”, August 2018) could constrain the access of the Greek banks to the ECB’s low-cost main refinancing operations on the basis of non-investment grade collateral leading to a substitution with higher cost sources of financing.

In this vein, Greece’s sovereign and private debt valuations and economic conditions, in general, are unlikely to remain unaffected in the event of a significant adjustment in international markets and/or a protracted increase in volatility internationally, despite the supportive role of improving macroeconomic stability domestically. Potential delays in the completion of key structural reforms initiated under the Third Program and being subject to the post-program surveillance framework, or the inability to safeguard the objectives of the adopted reforms, or the failure in reaching the primary surplus targets could undermine the credibility of the assumptions underlying the debt-relief measures and, could, subsequently, give rise to negative confidence and liquidity effects, delay the relaxation of capital controls and exert additional downward pressures on collateral valuations — especially real estate. Moreover, the recovery in domestic demand could be weaker-than-expected if additional fiscal measures are needed to ensure the achievement of the medium term fiscal targets and/or the capacity to activate offsetting expansionary measures is diminished in the event of a fiscal underperformance in the following years.

Significant events regarding the NBG Group

The most significant events for the NBG Group from 1 January 2018 and up to the publication of this interim report are as follows:

Completed disposals of subsidiaries

Sale of Banka NBG Albania Sh.A to American Bank of Investments SA

On 2 February 2018, NBG entered into a definitive agreement for the sale of its entire stake (100.00%) in its subsidiary, Banka NBG Albania Sh.A. (“NBG Albania”) to American Bank of Investments SA (“ABI”). On 4 July 2018, following the receipt of the required regulatory approvals from i) the Bank of Albania and ii) the Competition Authority of Albania, the Bank announced the completion of the sale. The agreed considerations for the sale amounted to €25 million.

With the successful completion of the transaction, which has taken place in the context of NBG’s Restructuring Plan, the Group’s Common Equity Tier 1 (“CET1”) ratio increased by 11 bps, following the capital impact already booked in the fourth quarter of 2017 upon signing of the agreement.

Agreed disposals of subsidiaries

Sale of South African Bank of Athens Ltd (“S.A.B.A.”) to AFGRI Holdings Proprietary Limited

On 22 December  2016, NBG entered into a definitive agreement with AFGRI Holdings Proprietary Limited (“AFGRI”), a company incorporated in the Republic of South Africa for the divestment to AFGRI of its 99.82% stake in its South African subsidiary S.A.B.A. The agreed consideration for the sale of the subsidiary amounts to ZAR 279 million.

Closing of the transaction is expected during the third quarter of 2018 as it is subject to customary ongoing regulatory approvals, including from: (i) the South African Reserve Bank (already received) (ii) the South African Ministry of Finance (already received) and (iii) the South African Competition Commission and Competition Tribunal (preliminary approval has already been received; but the final approval based on an updated filing request is still pending).

D evelopments regarding the sale of Banca Romaneasca and Ethniki Insurance

Sale of Banca Romaneasca

On 26 July 2017, NBG entered into a definitive agreement with OTP Bank Romania (“OTPR”) for the divestment to OTPR of its 99.28% stake in its Romanian subsidiary Banca Romaneasca (“Romaneasca”).

However, on 19 March 2018, the Bank announced that the National Bank of Romania (“NBR”) rejected OTPR’s application to acquire 99.28% of Romaneasca as NBR’s approval of OTPR, as the new shareholder of Romaneasca, was a condition precedent for the closing of the transaction. The Share Purchase agreement between the Bank and OTPR was terminated on 13 April 2018.

It should be noted that this decision does not affect Romaneasca’s operations and business. Romaneasca continues to focus on its clients’ needs while maintaining profitability levels and strong capital base, on the back of continued support by NBG Group.

Nevertheless, management, in line with its Restructuring Plan, remains committed to selling Romaneasca, considers that the sale is highly probable and given that it is preparing to relaunch the sales process, expects to conclude it within 12 months. For this reason Romaneasca remains classified as “assets and liabilities held for sale” and “discontinued operations”.

Sale of the majority equity holding in Ethniki Hellenic General Insurance S.A. (“Ethniki Insurance” or “NIC”)

On 27 June 2017, the NBG’s Board of Directors approved the divestiture of a 75% stake in NIC to EXIN Financial Services Holding B.V. (“EXIN”) and the establishment of an exclusive bancassurance agreement, to govern the distribution of products of NIC via the NBG network.

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However, on 28 March 2018, the Longstop Date for EXIN to fulfill certain conditions precedent specified in the Share Purchase Agreement (“SPA”) entered into between NBG and EXIN, the Bank took note that such condition precedents were not fulfilled and decided to terminate the SPA on the 29 March 2018. Following a decision of the Bank’s Board of Directors and in consultation with the HFSF, the Bank has renewed the sale process of NIC by approaching the remaining selected bidders that participated in the last stage of the binding offers phase in May 2017.

Additionally, on 8 June 2018, the Bank announced that has received and will examine a binding offer from the Chinese Group of companies Gongbao. The Bank’s primary objective is that the procedure takes place in full compliance with the terms of the Revised Restructuring Plan and with the sole purpose of safeguarding the interests of its customers, shareholders and employees.

The historic values and the important role of Group in the stability of the Greek financial system impose the examination of all best possible solutions, including the procedure of an International Public Offering. In this context, the Bank cooperates closely with all involved parties and particularly Directorate General for Competition (“DG-Comp”), the Bank of Greece and the Hellenic Financial Stability Fund (“HFSF”).

Nevertheless, management, in line with its Restructuring Plan, remains committed to selling the NIC, considers that the sale is highly probable and expects to conclude it within 12 months. For this reason the NIC remains classified as “assets and liabilities held for sale” and “discontinued operations”.

NBG participation in the short term measures of Greek debt restructuring through a Bond Exchange program

As discussed above, on 5 December 2016, Eurogroup endorsed the implementation of the short-term debt relief measures beginning in early 2017 (see “ The Greek economy returned to positive growth in 2017 and entered 2018 with the strongest pace in 10 years ”). These measures included, among others, a bond exchange of the floating rate notes used for Greek banks’ recapitalization for fixed-rate notes with much longer maturities, with a view to stabilizing interest rates and smoothen the future debt repayments profile for the Greek State.

In this context, in 2017, from February and up to December, the Bank participated in the Bond Exchange Program of EFSF/ESM bonds of total amount with the nominal amount of €8.0 billion. The bonds were sold at their carrying amount, therefore, it had no impact on the Bank’s and the Group’s income statement.

The process of Bond Exchange Program was completed in January 2018 with the sale of €1.0 billion and all outstanding EFSF/ESM bonds have been sold.

Transition to IFRS 9 as of 1 January 2018

As of 1 January 2018, IFRS 9 “Financial Instruments” replaced International Accounting Standard (IAS) 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 introduces new requirements for a) the classification and measurement of financial instruments, b) impairment of financial assets and c) hedge accounting.

In order to comply with the requirements of the new Standard, the Group established an IFRS 9 implementation program (“the IFRS 9-Program”) to ensure a timely and high quality implementation, in accordance with the standard and additional regulatory guidance. The IFRS 9-Program involves Finance, Group Risk Control and Architecture Division (“GRCAD”), Management Information and IT Divisions across the Group and is overseen by a Project Steering Committee. This Committee comprises of the Chief Executive Officer (“CEO”) (Chair), Group Chief Financial Officer (“CFO”), Group Chief Risk Officer (“CRO”), Group Chief Operating Officer (“COO”), Group Treasurer and the General Managers of Retail, Corporate Banking, Corporate Special Assets and International Activities Divisions of the Bank. A full-time Project Management Office (“PMO”) was setup and a Project Manager assigned. Subject matter experts were also appointed to assist in model development of IFRS 9 compliant credit risk parameters. The Board Risk Committee, Audit Committee and Board of Directors are regularly updated by the Executive Management on the status of the IFRS 9-Program.

Impact from the first time adoption of International Financial Reporting Standard (IFRS) 9 on shareholders’ equity as of 1 January 2018

The adoption of IFRS 9 on 1 January 2018 decreased the Group’s and the Bank’s shareholders’ shareholders’ equity by approximately €1.5 billion, of which €1.3 billion respectively, due to changes in impairment requirements and €0.2 billion respectively, due to classification and measurement. A deferred tax asset of €6million and NIL was recognised by the Group and the Bank respectively, in accordance with the Group’s accounting policy for recognition of deferred tax assets. Refer to Note 2.31 to the annual Financial Statements of the Group and the Bank for the year ended 31 December 2017.

By applying the regulatory transitional arrangements for 2018, the Group’s and the Bank’s CET1 ratio as at 31 December 2017, decreased by approximately 58bps at 16.4% and 12bps at 16.7% respectively. On a fully loaded basis, as at 31 December 2017 the Group’s CET1 ratio decreased by approximately 373bps at 13.2%, while the Bank’s CET1 ratio decreased by approximately 408bps at 12.8%.

The above IFRS 9 impact estimates are based on the accounting policies, assumptions and judgments of the Group, as determined to date, which will be finalized during the preparation of the financial statements for the year ending 31 December 2018. Consequently, the aforementioned estimates remain subject to change in 2018. The final impact upon transition to IFRS 9 will be included in the 2018 Annual Financial Report. For more details, please also refer to Note 21.

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2018 EU wide stress test

On 31 January 2018 the ECB commenced the stress test exercise relating to the four systemic Greek banks (Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank) with the publication of the macroeconomic scenarios to be used by the banks. The stress test of the four systemic Greek banks was conducted on an accelerated timeline compared to the other in scope banks in order to allow the results to be published before the end of the Third Program for Greece (August 2018), but following the same EBA approach and methodologies as that applied to the other EU banks. The results for the four systemic Greek banks were announced by the Supervisory Board of the ECB on 5 May 2018, and showed that in the adverse scenario, the average Common Equity Tier 1 (“CET1”) capital depletion was 9 percentage points, equivalent to €15.5 billion across the four systemic Greek banks. The results for the other EU banks are expected to be published by 2 November 2018.

The Bank conducted the stress test exercise using the EBA methodology, the benchmark parameters, macroeconomic scenarios and shocks provided by the EBA and the ECB, as well as any additional guidance and notes published and/or relayed though formal communication channels. As a result, under the EBA adverse scenario, the CET1 ratio declined by 9.6 percentage points (“ppts”), reaching a CET1 level of 6.9% in 2020, including an IFRS 9 impact of -70 bps post 1 January 2018 and a CRD IV (as per Directive 2013/36/EU and the EU Capital Requirements Regulation (together, the “CRD IV”)) impact of -20bps. Under the baseline scenario, the CET1 ratio of the Group declined by 50bps reaching 16.0% in 2020, including an impact of -70bps from IFRS 9 phased in adoption and -20bps from CRD IV. Following the supervisory dialogue, the Bank was informed that the stress test outcome, along with other factors, have been assessed by Single Supervisory Mechanism’s (“SSM’s”) Supervisory Board pointing to no capital shortfall and that no capital plan was deemed necessary as a result of the exercise.

The stress test results will inform the 2018 Supervisory Review and Evaluation Process (“SREP”), challenging banks’ capital plans and leading to relevant supervisory outcomes. The stress test will also provide enhanced transparency so that market participants can compare and assess the resilience of EU banks on a consistent basis.

Recent developments

Appointment of Mr. Paul Mylonas as the Bank’s Chief Executive Officer following the resignation of Mr. Leonidas Fragkiadakis

On 4 May 2018, the Board of Directors accepted the resignation of the Bank’s Chief Executive Officer (“CEO”), Mr. Leonidas Fragkiadakis. At the same meeting, the Board of Directors announced that it decided to proceed promptly with the formulation and implementation of a new strategy following the completion of the biggest part of the Revised Restructuring Plan. The Board of Directors appointed Deputy Chief Executive Officer Mr. Paul Mylonas as Acting CEO of the Bank, and commenced a recruitment process for appointing a new CEO.

Subsequently, on 18 July 2018, the Board of Directors of NBG unanimously elected Mr Paul Mylonas as CEO of the Bank.

Agreement of €50 million to finance SMEs and Mid-Caps

On 20 July 2018, the European Investment Bank (“EIB”), NBG and Ethniki Leasing S.A. signed a €50 million loan agreement, in order to finance small and medium-sized enterprises (“SMEs”) and medium-sized companies (“Mid-Caps”). This transaction is expected to create new prospects for SMEs and Mid-Caps and facilitate their access to funding, while offering favourable pricing terms.

Completion of the transaction for the disposal of a portfolio of non-performing unsecured retail and small business loans in Greece

On 2 July 2018 it completed the disposal of a portfolio of non-performing unsecured retail and small business loans in Greece, of an outstanding principal amount of c. €2.0 billion, to CarVal Investors and Intrum AB.

The transaction was part of NBG’s NPE management strategy and in accordance with the NPE reduction plan submitted to SSM. The consideration of the transaction, which amounted to c. 6% of the total outstanding principal amount, was capital accretive adding c. 18 bps in CET1.

2018 Reverse split

On 26 July 2018, the Annual General Meeting of the Bank’s shareholders approved to increase the nominal value of each common voting share of the Bank from €0.30 to €3.00 per share and simultaneously combining and decreasing the total number of shares by a ratio of 10 old shares for 1 new, that is from 9.147.151.527 to 914.715.152.

The reverse split was approved by Athens Exchange Corporate Actions Committee on 24 August 2018. The trading of the old shares ceased on 29 August 2018 and the trading of the new shares is expected to commence on 3 September 2018.

Issuance of debt securities

On 30 July 2018, the Bank issued under its Covered Bond Programme II, a five-year fixed rate €200 million Covered Bond at 1.85% coupon and yield, of which €100 million were privately placed with the EIB in the context of financing loans to SMEs and MidCaps, and the remaining €100 million have been initially retained by the Bank. The Bank and EIB have agreed, that the EIB, subject to the agreement to the Bank, may purchase the remaining retained covered bonds in the following six months, at the same price levels. The Bank’s actual cost is 1.42% per annum, as the EIB returns to NBG part of the coupon, in accordance to its mandate to increase the available financing for SMEs and Midcaps.

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Furthermore, on 14 August 2018, the Bank issued under its Covered Bond Programme II, one-year fixed rate €600 million Covered Bond at 0.75% coupon and yield, which has been retained by the Bank and used as collateral for the main refinancing operations of the ECB.

Agreement between the four Greek systemic banks and doBank S.p.A. for the management of a portfolio of Non Performing Exposures with a value of euro 1.8 billion

O n 31 July 2018, the four systemic Banks (Alpha Bank, National Bank of Greece, Eurobank and Piraeus Bank) entered into an internationally innovative servicing agreement with the credit institution specialized on servicing of non-performing loans, doBank S.p.A (“doBank”). This agreement is part of the strategic framework of the Greek systemic Banks to reduce their non-performing exposures by protecting the viability of small and medium enterprises (“SMEs”) and supporting the recovery of the Greek economy.

Financial Results during the first half of 2018

Asset Quality

NPE reduction continued in H1.18, with the stock of domestic NPEs down by €1.3 billion from Q4.17, driven by negative NPE formation of €0.3 billion and write-offs of €1.0 billion. The NPE movement in H1.18 incorporates the recently completed NPL disposal of unsecured retail and SBLs in Greece of an outstanding principal amount of c. €2 billion. The consideration of the transaction, which amounted to c. 6% of the outstanding principal amount, was capital accretive adding c. 18bps to CET1.

Following the NPL sale, NPE reduction stands €1.3 billion ahead of target, fulfilling already the FY.18 SSM requirement. The net NPE reduction achieved since end-2015 amounts to €5.5 billion, reflecting negative NPE formation (-€2.1 billion) and write offs (-€3.4 billion), with the bulk of the latter eventually sold.

The NPE ratio in Greece dropped by 142 bps in H1.18 to 42.6%, with NPE coverage settling at 60.1%.

Domestic 90dpd formation also remained in negative territory in H1.18 (-€256 million). 90dpd ratio settled at 30.4% (-161bps in H1.18) on coverage of 84.0% (82.8% at the Group level).

In SE Europe (2), the 90dpd ratio in H1.18 settled at 31.8% (from 33.2% in YE.17) on coverage of 62.8% (from 59.5% in YE.17).

Enhanced Liquidity

Group deposits increased by 2.4% in H1.18 to €41.2 billion as of 30 June 2018, reflecting mainly domestic market developments. Domestic deposits amounted to €39.3 billion on H1.18 inflows of €0.9 billion. In SE Europe(2), deposits remained flat in H1.18 at €1.9 billion. On an annual basis, Group deposits grew by 8.2% y-o-y, reflecting deposit inflows of €3.1 billion in Greece, despite continuous capital control uplifts.

As a result, NBG’s Loan to Deposit ratio decreased further to 72.8% in Greece (76.0% in Q4.17, as adjusted per IFRS 9) and 73.5% at the Group level.

Eurosystem remains at €2.8 billion currently from €12.3 billion at end-Q4.16, comprising of TLTRO funding from the ECB, with the Bank enjoying a large liquidity buffer. Following ELA elimination in end-November 2017, our Liquidity Coverage Ratio (“LCR”) ratio is now over the minimum regulatory requirement of 100% (at 104% and 117% for the Bank and the Group, respectively as at end-July 2018).

The removal of ECB’s waiver in August 2018 leaves NBG’s funding cost unaffected as Greek government bonds and treasury bills were replaced by investment grade covered bonds.

Capital position

Group Common Equity Tier 1 (“CET1”) ratio at 30 June 2018, by applying the IFRS 9 regulatory transitional arrangements stood at 16.2%, and 16.4% pro-forma incorporating the H1.18 profit and the reduction of the RWAs due to the disposal of the Albanian operations completed on 4 July 2018. CET1 ratio remains comfortably above regulatory requirements.

Taking into account the full IFRS 9 impact, CET1 ratio settles at 12.8%, or pro-forma 13.0%.

Profitability

Group:

Continuing : Group profit from continuing operations in H1.18, excluding the 1-off cost of the ongoing Voluntary Exit Scheme (“VES”) of €40 million, amounted to €41 million from losses of €59 million in H1.17, mainly due to decline in loan impairments offset by reduced NII.

Discontinued : Profit from discontinued operations in H1.18 amounted to €38 million from loss €68 million in the respective period. In H1.17, the losses included the impairment losses of €151 million for Romaneasca and Serbian operations offset by the gain on disposal of the Bulgarian operations.

Greece:

Profit for the period from continuing operations, excluding 1-off cost of the ongoing VES of €40 million, amounted to €28 million in H1.18 from losses €73 million in H1.17, reflecting the 63.9% y-o-y decrease in loan impairments that offset the pressure in core income (-19.7% y-o-y).

(2)  SE Europe includes the Group’s businesses in Cyprus and the Former Yugoslav Republic of Macedonia

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In H1.18, the sharp de-escalation in CoR (-168bps y-o-y) brought operating result to positive territory (€50 million) against the losses of €53 million in H1.17.

NII amounted to €523 million in H1.18 from €681 million in H1.17 as restated in order to reclassify the interest income of the loan to the Greek State from NII to trading income under IFRS 9 of €82 million, reflecting the impact of restructurings and sustained deleveraging in the retail book, with corporate balances stable. Additionally, in H1.18 NII was negatively affected by the rate adjustment on €0.8 billion of mortgages linked to one year Greek T-Bills. NIM decreased by 37 bps y-o-y to 277bps and NII declined by 23.2% y-o-y.

Net fee and commission income amounted to €110 million from €115 million y-o-y, the reduction driven mainly by the elimination of ELA-related fees.

Furthermore, trading line in H1.18 was supportive in a deteriorating international environment, generating gains of €25 million by taking into account the aforementioned reclassification under IFRS 9 from NII to trading income of €82 million.

Operating Expenses in H1.18, amounted to €433 million from €421 million in H1.17, an increase of 2.9% y-o-y, driven again by higher general and administration expenses, which are due to seasonal factors and are expected to reverse in H2.2018. Operating Expenses are expected to return to negative growth rates upon completion of the ongoing VES, benefiting personnel expenses in H2.18.

Loan impairments amounted to €156 million in H1.18 from €431 million the previous year, aided by recoveries related to the €2 billion NPL disposal. As a result, in H1.18 CoR settled at 108 bps from 276bps in H1.17, constituting the key driver for our return to operating profitability.

SE Europe:

In SE Europe, gains from continued operations in H1.18 reached €13 million (€15 million in H1.17).

Going concern

Liquidity

As at 30 June 2018, the funding from ECB amounted to €2.75 billion, and remained unchanged compared to 31 December 2017. Furthermore, as at 30 June 2018 the Bank had entered into secure interbank transactions with foreign financial institutions of €3.5 billion, while the Bank’s ELA liquidity buffer stood at €9.1 billion (cash value).

Capital adequacy

The Group’s Common Equity Tier 1 (“CET1”) ratio at 30 June 2018, by applying the IFRS 9 regulatory transitional arrangements was 16. 2%, exceeding the Supervisory Review and Evaluation Process (“SREP”) ratio of 12.875% for 2018 (see Note 16).

Going concern conclusion

Management concluded that the Bank is a going concern after considering (a) the NIL ELA funding, the ECB funding solely through TLTRO and the current access to the Eurosystem facilities with significant collateral buffer (b) the Group’s CET1 ratio of 30 June 2018 which exceeded SREP requirements even after the adoption of IFRS 9, (c) the results of the recent Stress Test exercise, based on which no capital plan was deemed necessary (see “ 2018 EU wide Stress Test ” and Note 16) and (d) the recent developments regarding the Greek economy and the latest estimates regarding macroeconomic indicators, as discussed above, (see “ The Greek economy returned to positive growth in 2017 and entered 2018 with the strongest pace in 10 years ” and “ Anticipated developments (risk and uncertainties )”).

The Restructuring Plan as approved by the Directorate General for Competition on 4 December 2015 (the “Revised Restructuring Plan”)

The Group is subject to European Commission rules on EU state aid in light of the aid received from the HFSF and the Hellenic Republic. These rules are administered by the Directorate General for the Competition of the European Commission. Under these rules, the Bank’s operations are monitored and limited to the operations included in the Revised Restructuring Plan, which aims to ensure the Bank’s return to long-term viability.

The Revised Restructuring Plan was approved on 4 December 2015, by the European Commission.

The Revised Restructuring Plan includes a number of commitments to implement certain measures and actions that have to be completed during the period 2015-2018 (the “Commitments”). The Commitments relate both to domestic and foreign operations of the Group. Differentiations to the restructuring plan approved in July 2014 relate to the deepening of the bank’s operational restructuring, some amendments on commitment’s deadlines, as well as a commitment to further dispose of foreign assets.

For domestic operations, the Commitments relate to constraining operating expenses, including the number of personnel and branches. Other Commitments relate to monitoring the cost of deposits in Greece, maintaining a level of loans-to-deposits ratio below a maximum ratio, adhering to an investment policy and the divestment from certain domestic non-banking activities.

In particular, the Commitments include the following:

·                   Number of branches in Greece : Restriction of the total number of branches in Greece to 540 at the end of 2017 (as of 30 June 2018: 484).

·                   Total Full time equivalent personnel (“FTEs”) in Greece : Restriction of the total number of FTEs in Greece to a maximum of

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10,250 at the end of 2017 and 9,950 at the end of 2018. The Group has proceeded to a significant reduction of FTEs in Greece, including the voluntary exit schemes in 2013, 2016 and the on-going scheme in 2018, through which 3,994 employees left or have agreed to leave the Bank and certain Greek subsidiaries. As of 30 June 2018, the domestic FTEs were 9,572 (3) (or 10,352 when including FTEs from NIC).

·                   Total operating costs in Greece : Restriction of total operating costs in Greece to €961 million for the year 2017. For the year ended 31 December 2017 such costs amounted to €868 3  million (or 950 million including NIC costs). For the six-month period ended 30 June 2018 such costs amounted to €433 3  million (or 474 million including NIC costs).

·                   Cost of deposits in Greece : NBG will have to follow its own projections with regards to the cost of domestic deposits, as this is depicted in the Revised Restructuring Plan until the end of 2018, in order to regain its profitability in Greece. NBG has already achieved the reduction of its cost of deposits in Greece in line with forecasts in the Restructuring Plan.

·                   Loans/Deposits : Restriction of the Loan/Deposit ratio in Greece at a maximum of 115% at the end of 2018. As of 30 June 2018 the ratio was 72.8%.

·                   Domestic non-banking activities: NBG will divest from certain domestic non-banking activities. More specifically, in June 2017, NBG entered into an agreement with EXIN to sell a 75.00% stake in NIC. However, on 28 March 2018, which was the last date (“Longstop Date”) for EXIN to fulfil certain condition precedents specified in the SPA entered into between NBG and EXIN, the Bank took note that such condition precedents were not fulfilled and henceforth decided to terminate the SPA on 29 March 2018. Following a decision of the Bank’s Board of Directors and in consultation with the HFSF, the Bank has renewed the sale process of NIC by approaching the remaining selected bidders that participated in the last stage of the binding offers phase in May 2017. Subsequently, on 8 June 2018, the Bank announced that has received and will examine a binding offer from the Chinese Group of companies Gongbao (see also above “Sale of the majority equity holding in Ethniki Hellenic General Insurance S.A. (“Ethniki Insurance” or “NIC”) to EXIN Financial Services Holding B.V.”).

·                   Reduction of securities portfolio: NBG will reduce its investments in shares, subordinated debt and hybrid securities. More specifically, NBG has significantly reduced this portfolio, from €184 million as of 30 June 2013 to €8 million as of 30 June 2018.

·                   Disposal of Private Equity Funds (“Funds”) : The disposal was completed on 30 September 2016.

Regarding its international operations, NBG’s Commitments mainly refer to the below:

·                   Sale of Finansbank : On 15 June 2016, NBG completed the sale of 99.81% of its shareholding in Finansbank. Following the closing, on 15 December 2016, NBG proceeded with the full repayment of the Contingently Convertible Securities (“CoCos”).

·                   Divestment from international operations : NBG will reduce its international activities, by disposing of certain subsidiaries and branches. More specifically, in June 2017, the Bank completed the sale its 99.91% shareholding in UBB (Bulgaria) and its 100.00% shareholding in Interlease E.A.D. (Bulgaria) to KBC Bank (Belgium). In December 2017, the Bank completed the sale of its 100.00% Serbian subsidiaries Vojvodjanska Banka a.d. Novi Sad, NBG Leasing d.o.o. Belgrade and NBG Services d.o.o. Belgrade to OTP Banka Srbija a.d. In July 2018, the Bank completed the sale its 100.00% subsidiary NBG Albania to ABI. Additionally, in December 2016, NBG entered into a SPA for the sale of its subsidiary S.A.B.A. Closing of the transaction for S.A.B.A. is expected by the end of the third quarter of 2018, subject to customary regulatory and antitrust approvals. Additionally, although the Bank in July 2017, entered into SPAs for the sale of 99.28% of its Romanian subsidiary Romaneasca, on 19 March 2018, the Bank announced that the NBR rejected OTPR’s application to acquire 99.28% of Romaneasca as NBR’s approval of OTPR, as the new shareholder of Romaneasca, was a condition precedent for the closing of the transaction. Finally, the Bank is in the process of divesting from remaining foreign operations, including from Cyprus, FYROM and Egypt, while it has initiated a new process for the divestment of its Romanian subsidiary.

Other Commitments refered to the following:

·                   Investment policy : Until 30 June 2017, NBG will not invest in non-investment grade securities, except for specific cases.

·                   Salary cap : Until 31 December 2017, restriction of the total annual remuneration (including salary, pension contribution and bonus) of any of NBG’s employees to a certain amount.

·                   Prolongation of Commitments: Until 30 June 2018, NBG will continue to implement the Commitments on Corporate Governance and Commercial Operations, as submitted by the Hellenic Republic on 20 November 2012.

The implementation of the Commitments set out in the Revised Restructuring Plan is monitored by the Monitoring Trustee.

Implementation of the Bank Recovery and Resolution Directive

Greek Law 4335/2015, as in force implements in Greek law Directive 2014/59/EU of 15 May 2014, which provides for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms (the “Bank Recovery and Resolution Directive” or “BRRD”). The BRRD is designed to provide authorities with a credible set of tools to intervene sufficiently early and quickly to avoid a significant adverse effect on the financial system, to prevent threats to market infrastructures, to protect depositors and investors and to minimize reliance on public financial support.

The BRRD contains a broad range of resolution tools and powers which may be used alone or in combination where the relevant resolution authority considers that certain required conditions are met, including, inter alia, that an institution is failing or likely to fail and no alternative private sector measure, or supervisory action, would prevent the failure of the institution within a reasonable timeframe. The resolution tools include the power to sell or transfer assets (or ownership thereof) to another institution and a general bail-in tool, which provides for the write-down or conversion of any obligations of the institution that meet relevant conditions. In cases of an

(3)  Excluding NIC.

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exceptional systemic crisis, extraordinary public financial support may be provided in accordance with the EU state aid framework, as a last resort and subject to additional conditions.

In addition to the general bail-in tool, the BRRD provides for resolution authorities to have the power to permanently write-down or convert into equity capital instruments such as subordinated notes at the point of non-viability and before any other resolution action is taken (non-viability loss absorption). These measures could be applied to certain of the Group’s debt securities under certain conditions. Furthermore, in circumstances where capital instruments are converted into equity securities by application of the mandatory write-down tool, those equity securities may be subjected to the bail-in powers in resolution, resulting in their cancellation, significant dilution or transfer away from the investors therein. Furthermore, Greek Law 4335/2015 designated the Resolution Leg of Hellenic Deposit and Investment Guarantee Fund (“HDIGF”) as the new National Resolution Fund as far as credit institutions are concerned.

I t should be noted that Executive Committee Act 111/31.01.2017 of Bank of Greece provides interpretation of the different circumstances when an institution shall be considered as failing or likely to fail regarding the implementation of the obligation of the Board of Directors of the institution to notify the Bank of Greece.

Furthermore, BRRD provides that a parent institution seated in a Greece and its subsidiaries in other Member States or third countries that are institutions or financial institutions covered by the consolidated supervision of the parent undertaking, may enter into an agreement to provide financial support to any other party to the agreement that meets the conditions for early intervention, provided that the conditions laid down in Greek Law 4335/2015. Executive Committee Act 131/23.01.2018 of Bank of Greece specifies the conditions of Greek Law 4335/2015 for the group financial support. The parent institution shall submit to the consolidating supervisor an application for authorisation of any proposed group financial support agreement proposed. Any proposed agreement that has been authorised by the competent authorities be submitted for approval to the shareholders of every group entity that proposes to enter into the agreement. The Board of Directors of each entity that is party to an agreement shall report each year to the shareholders on the performance of the agreement, and on the implementation of any decision taken pursuant to the agreement.

Delegated and implementing EU Regulations have been further issued providing clarifications and guidance on the implication of the above mentioned. Lastly, it should be noted that Directive 2017/2399/EU amends Directive2014/59/EU as regards the ranking of unsecured debt instruments in insolvency hierarchy. According to the abovementioned Directive Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 29 December 2018.

Trend information

As discussed above regarding the Financial and Macroeconomic environment in Greece, the recovery of the Greek economy will accelerate in 2018, driven by increased exports and tourism, improvement in labor market conditions, as well as the successful completion of the Third Program. This is a significant enabler for the Bank to achieve profitability and start growing its capital internally, to outweigh the impact on regulatory capital from the phased-in application of IFRS 9.

Within this improved financial and business environment, the Bank managed in 2018 to reduce further its non-performing exposures, exceeding the target agreed with the SSM by €1.3 billion, while increasing the coverage ratio of non-performing exposures by accumulated provisions. At the same time, the Bank improved its liquidity position, having zero exposure to ELA, creating a significant liquidity reserve, regaining access to the financial markets and maintaining the lower cost of funding in the Greek banking system.

In July 2018, the Bank completed successfully the disposal of a portfolio of non-performing unsecured retail and small business loans in Greece, of an outstanding principal amount of c. €2.0 billion, which had a positive effect on profitability and capital. This transaction, will be followed with the sale of a collateralised loan portfolio in the second half of 2018. The over-performance of €1.3 billion against the SSM target as of 30 June 2018, along with the planned sale of non-performing exposures and the scheduled auctions point to a significant outperformance versus the 2018 SSM target and a fast reduction of the non-performing exposures in the coming years.

Further to the above, the four systemic Banks (Alpha Bank, National Bank of Greece, Eurobank and Piraeus Bank) on 31 July 2018 entered into an internationally innovative servicing agreement with a credit institution specialized on servicing of non-performing loans, doBank S.p.A (“doBank”). This agreement is part of the strategic framework of the Greek systemic Banks to reduce their non-performing exposures by protecting the viability of small and medium enterprises (“SMEs”) and supporting the recovery of the Greek economy.

The Bank with the adoption of IFRS 9 implemented a comprehensive provisioning policy, applying the stricter definition of default as per the EBA regarding the non-performing exposures. As a result, the coverage ratio for non-performing exposures from accumulated provisions increased to 60.1%. Against this context, and given the improvement in economic and banking conditions, the Group managed to substantially reduce the Cost of Risk in the first half of 2018, contributing decisively to its return in organic profitability.

In terms of liquidity, the Bank managed from November 2017 to fully eliminate its dependence on ELA. This is due to the effective implementation of its Revised Restructuring Plan, the regaining of its access to interbank and money markets, the deleveraging of the loan portfolio and the gradual return of deposits. At the same time, NBG’s low financing cost, reflects its significant market share in savings deposits and its optimal management of funding sources. Moreover, following the official ECB statement, of non-inclusion in the bond-buying program (“QE”) program the Greek government bonds and the removal of the waiver that allows Greek debt to be accepted as collateral from the ECB (“waiver”), the Bank has anticipated these developments, and proactively implemented its strategy for increasing its liquidity instruments that are acceptable by the Eurosystem, or can be placed with the market. Specifically, on 30 July 2018 and on 14 August 2018, the Bank issued new covered bonds of €200 million of which the amount of €100 million were privately placed and €600 million which has been retained by the Bank and used as collateral for the main refinancing operations of the ECB, respectively (see above “ Issuance of debt securities ”). These covered bonds are investment grade as they have been rated as BBB- by S&P and replaced Greek government bonds and treasury bills as collateral with the ECB.

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Following the above, in July 2018, the LCR exceeded for the first time the minimum regulatory requirement of 100% at both Bank and Group level, reaching 104% and 117%, respectively.

Additionally, in the context for further increasing profitability, the Bank will continue to focus on improving its cost structure by implementing VES initiatives and reducing general and administrative expenses, in alignment with the Bank’s overall strategy. Further cost reductions of general and administrative costs are expected to result from reorganization of banking operations, optimization of internal processes, and further rationalization of branch network and operations. Digitalization benefits are also to be expected in the medium term, after the relevant investments are completed.

Based on the above, and considering the Bank’s liquidity surplus, NBG focuses mainly on the financing of healthy businesses. It is worth noting that there are already early signs of a recovery in the demand for business loans in 2018, with business disbursements exceeding €1 billion in the first half of 2018, and expected to increase further in the last months of the year.

Looking forward, the Bank aims to become again the preferred partner and consultant for Greek businesses and households, by capitalizing its comparative advantages and its determination to evolve quickly. The new strategy of the Bank, as client oriented, will be characterized, in the context of consensus, transparency and clear corporate governance rules, with flexibility, operational efficiency and innovation. NBG Group strategy and estimates for the development of its operation.

Events after the reporting period

Events after the reporting period are disclosed at “ Recent developments ” above.

Risk management

The Group acknowledges its exposure to banking risks as well as the need for effective risk management. Risk management and control forms an integral part of the Group’s commitment to providing continuously sound returns to its shareholders.

Credit risk

Credit risk is the risk of financial loss relating to the failure of a borrower to honor its contractual obligations. It arises in lending activities as well as in various other activities where we are exposed to the risk of counterparty default, such as our trading, capital markets and settlement activities. Credit risk is the largest single risk we face. Our credit risk processes are conducted separately by the Bank and each of our subsidiaries. The credit risk procedures established by the subsidiaries are coordinated by the Group Risk Control & Architecture Division (“GRCAD”).

The Group’s credit granting processes include:

·                   Credit-granting criteria based on the particular target market, the borrower or counterparty, as well as the purpose and structure of the credit and its source of repayment.

·                   Credit limits that aggregate in comparable and meaningful manner different types of exposures, at various levels.

·                   Clearly established procedures for approving new credits as well as the amendment, renewal and re-financing of existing credits.

The Group maintains on-going credit administration, measurement and monitoring processes, including in particular:

The Group’s internal controls that are implemented for the credit risk related processes include:

Active credit risk management is achieved through:

·                   The application of appropriate limits for exposures to a particular obligor, a group of associated obligors, obligors that belong in the same economic sector, etc.

·                   The use of credit risk mitigation techniques (such as collaterals and guarantees).

·                   The estimation of risk adjusted pricing for most products and services.

Since 2008, the Bank is following the Internal Ratings Approach (“IRB”) for the calculation of capital requirements arising from credit risk in its corporate, SME Retail and mortgage portfolios.

Market risk

Market risk is the current or prospective risk to earnings and capital arising from adverse movements in interest rates, equity and commodity prices and exchange rates, and their levels of volatility. The Group engages in moderate trading activities in order to enhance profitability and service its clientele. These trading activities create market risk, which the Group seeks to identify, estimate, monitor and

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manage effectively through a framework of principles, measurement processes and a valid set of limits that apply to all of the Group’s transactions. The most significant types of market risk for the Group are interest rate, equity and foreign exchange risk.

Interest rate risk is the risk related to the potential loss on the Group’s portfolio due to adverse movements in interest rates. A principal source of interest rate risk exposure arises from the interest rate, over-the-counter (“OTC”) and exchange traded derivative transactions, as well as from the Hold to Collect and Sell (“HTCS”) measured at fair value through other comprehensive income (“FVTOCI”) bond portfolios.

The most significant contributor to market risk in the Group is the Bank. More specifically, the Bank is active in the interest rate and cross currency swap market and engages in vanilla and more sophisticated transactions for hedging and proprietary purposes and it maintains positions in bond and interest rate futures, mainly as a means of hedging and to a lesser extent for speculative purposes. Additionally, the Bank retains a portfolio of Greek T-Bills and government bonds and other EU sovereign debt, EFSF bonds, as well as moderate positions in Greek and international corporate bonds.

Equity risk is the risk related to the potential loss due to adverse movements in the prices of stocks and equity indices. The Group holds a limited portfolio of stocks, the majority of which are traded on the Athens Exchange (the “ATHEX”) and retains positions in stock and equity index derivatives traded on the ATHEX, as well as, on international exchanges. The cash portfolio comprises of trading (i.e. short-term) and HTCS (i.e. long-term) positions. The portfolio of equity derivatives is used for proprietary trading, as well as for the hedging of equity risk arising from the Group’s cash positions and equity-linked products offered to its clientele. In the same context and to a lesser extent, the Group enters into OTC equity derivative transactions for trading and hedging purposes.

Foreign exchange risk is the risk related to the potential loss due to adverse movements in foreign exchange rates. The Open Currency Position (“OCP”) of the Bank primarily arises from foreign exchange spot and forward transactions. The OCP is distinguished between Trading and Structural. The Structural OCP contains all of the Bank’s assets and liabilities in foreign currency (for example loans, deposits, etc.), along with the foreign exchange transactions performed by the Treasury Division. Apart from the Bank, the foreign exchange risk undertaken by the rest of the Group’s subsidiaries is insignificant.

The Bank, in order to ensure the efficient management of market risk, calculates the Value at Risk (“VaR”) of its trading and HTCS portfolios on a daily basis, along with the VaR per risk type. This has been implemented through RiskWatch by Algorithmics (currently IBM). The VaR estimates refer to a 1-day holding period and a 99% confidence interval. The most significant types of market risk to which the Bank is exposed are interest rate, equity and foreign exchange risk.

The Bank has established a framework of VaR limits in order to control and manage more efficiently the risks to which it is exposed. These limits have been determined based on the Risk Appetite framework of the Bank, the anticipated profitability (P&L budgeting) of the Global Markets Division, within Treasury and the level of NBG’s own funds (capital budgeting), in the context of the Group strategy; they refer not only to specific types of market risk, such as interest rate, foreign exchange and equity risk, but also to the overall risk of the Bank’s trading and HTCS portfolios. Moreover, the same set of limits are used to monitor and manage risk levels on the Trading Book, on an overall basis and per risk type, since this is the aggregation level relevant for the calculation of the own funds requirements for Market Risk, under the Internal Model Approach (IMA).

In order to verify the predictive power of the VaR model, which is used for the estimation of market risk, the Bank conducts back-testing on a daily basis. In accordance with the guidelines set out in the Capital Requirements Regulation 575/2013, the calculations only refer to the Bank’s trading portfolio and involve the comparison of the hypothetical and actual daily gains/losses of the portfolio with the respective estimates of the VaR model. Any excess of the hypothetical / actual losses over the VaR estimate is reported to the authorities within five business days.

The daily VaR estimations refer to “normal” market conditions. However, supplementary analysis is necessary for capturing the potential loss that might arise under extreme and unusual circumstances in the financial markets. Thus, the Bank conducts stress testing on a weekly basis, on both the trading and HTCS portfolios, based on specific scenarios, depending on the risk factor category (interest rates, stock index prices, exchange rates).

Liquidity Risk

Liquidity risk is defined as the current or prospective risk to earnings and capital arising from the institution’s inability to meet its liabilities when they come due without incurring unacceptable losses.

It reflects the potential mismatch between incoming and outgoing payments, taking into account unexpected delays in repayments (term liquidity risk) or unexpectedly high outflows (withdrawal/call risk). Liquidity risk involves both the risk of unexpected increases in the cost of funding of the portfolio of assets at appropriate maturities and rates, and the risk of being unable to liquidate a position in a timely manner and on reasonable terms.

The Bank’s executive and senior management has the responsibility to implement the liquidity risk strategy approved by the Board Risk Committee (“BRC”) and to develop the policies, methodologies and procedures for identifying, measuring, monitoring and controlling liquidity risk, consistent with the nature and complexity of the relevant activities. The Bank’s executive and senior management is informed about current liquidity risk exposures, on a daily basis, ensuring that the Group’s liquidity risk profile stays within the approved levels.

In addition, top management receives a liquidity report, on a daily basis, which presents a detailed analysis of the Group’s funding sources and counterbalancing capacity. Moreover, the Asset Liability Committee (“ALCO”) monitors the gap in maturities between assets and liabilities as well as the Bank’s funding requirements based on various assumptions, including conditions that might have an adverse

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impact on the Bank’s ability to liquidate investments and trading positions and its ability to access the capital markets. On a long term perspective, the Loans-to-Deposits ratio is monitored. This ratio stood at 72.8% and 73.5% as of 30 June 2018, on a domestic (Greece) and on a Group level, respectively.

Since liquidity risk management seeks to ensure that the respective risk of the Group is measured properly and is maintained within acceptable levels then, even under adverse conditions, the Group must have access to funds necessary to cover customer needs, maturing liabilities and other capital needs, while simultaneously maintaining the appropriate counterbalancing capacity to ensure the above. In addition to the Bank’s liquidity buffer, the rest of the Group’s subsidiaries maintain a liquidity buffer well above 10% of their total deposits, which ensures their funding self-sufficiency in case of a local crisis.

The Bank’s principal sources of liquidity are its deposit base, Eurosystem funding via the Main Refinancing Operations (“MROs”) and the Targeted Longer-term Refinancing Operations (“TLTROs”) with ECB and repurchase agreements (“repos”) with major foreign Financial Institutions (“FIs”). ECB funding and repos with FIs are collateralized mainly by high quality liquid assets, such as EFSF bonds, EU sovereign bonds, Greek government bonds and T-Bills, as well as by other assets, such as highly rated corporate loans and covered bonds issued by the Bank.

The Bank’s liquidity profile was further improved during the first half of 2018. The customer deposits increased by €0.9 billion and stood at €39. 8 billion as of 30 June 2018. Moreover, the exposure to Eurosystem funding remained stable and stood at the historically low level of €2.75 billion, comprised exclusively of TLTROs. Furthermore, the Bank completed the exchange of EFSF bonds in the context of the short-term debt relief measures for Greece, by selling a remaining position in the amount of c. €1 billion, in January 2018. Additionally, the liquidity position was further enhanced through the deleveraging of loans portfolio in the amount of c. €0.5 billion. Finally, secured funding through repos with FIs moderately increased by €0.1 billion and stood at €3.5 billion.

Furthermore, the LCR was significantly improved and stood at 78% and 86% at Bank and Group level respectively. In addition, the Bank remained out of the ELA mechanism, retaining eligible collateral to draw liquidity from other sources (“Distance to ELA”) in the amount of €4 billion. Overall the Bank’s liquidity buffer increased by €2.1 billion and stood at €13.8 billion as of 30 June 2018, of which €4.2 billion was either in the form of Cash or deposited in Nostro accounts and in NBG’s current account with the Bank of Greece as excess reserves, while €0.4 billion was collateral eligible for funding with the ECB, €0.1 billion was collateral that could be used for secured funding with FIs and the remaining €9.1 billion was collateral that could be posted in order to draw liquidity from ELA. Finally, the Bank’s funding cost slightly decreased and stood at 0.48%.

Counterparty Risk

Counterparty risk for the Group is due to OTC derivative transactions and other interbank secured and unsecured funding transactions and it arises from the obligor’s failure to meet her contractual obligations. For the efficient management of counterparty risk, the Bank has established a framework of counterparty limits. The Group Market and Operational Risk Management Division (“GMORMD”) is responsible for setting these limits and monitoring the respective exposures.

Counterparty limits are based on the credit rating of the financial institutions as well as the product type. The credit ratings are provided by internationally recognized rating agencies, in particular by Moody’s and Standard & Poor’s. According to the Bank’s policy, if the agencies diverge on the creditworthiness of a financial institution, the lowest credit rating is considered.

Counterparty limits apply to all financial instruments in which the Treasury is active in the interbank market. The limits framework is annually revised according to the business needs of the Bank and the prevailing conditions in international and domestic financial markets. A similar limit structure for the management of counterparty risk applies across all of the Group’s subsidiaries.

The estimation of the exposure to each counterparty depends on the type of the financial product. In the case of money market placements, exposure is equal to the face amount of the transaction. In over the counter transactions, exposure is calculated based on Credit Equivalent Factors, according to the type of the transaction, its maturity, netting and collateralization.

The Group seeks to reduce counterparty risk by standardizing its transactions with counterparties through International Swaps and Derivatives Association (“ISDA”) and Global Master Repurchase Agreement (“GMRA”) contracts, which encompass all necessary netting and margining clauses. Additionally, for almost all active counterparties, Credit Support Annexes (“CSAs”) have been signed, so that net current exposures are managed through margin accounts on a daily basis, by exchanging cash or debt securities as collateral, thus minimizing counterparty risk.

The Group avoids taking positions on derivative contracts where the values of the underlying assets are highly correlated with the credit quality of the counterparty (wrong-way-risk).

Operational risk

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The Group, acknowledging the importance of operational risk, has established and maintained a firm wide and effective, high quality framework for its management, since 2006. Starting in 2009, the management of operational risk throughout the Group was supported by Algorithmics (currently IBM) OpVar system, whereas in 2018 NBG migrated to a new more advanced software (OpenPages, also developed by IBM). The specific software supports the overall operational risk management framework, which consists of the Loss Event Data Collection, the Risk and Controls Self-Assessment annual process, the definition and monitoring of Key Risk Indicators, the Structured Scenario Analysis process and the determination and monitoring of Action Plans.

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The Bank has adopted the Standardized Approach for the calculation of operational risk regulatory capital requirements, both on a solo and on a consolidated basis.

Interest rate risk in the banking book

The Group systematically measures and manages the interest rate risk arising from its banking book items through:

·                   The analysis of re-pricing and liquidity gaps arising from its balance sheet structure.

·                   The measurement of economic value of equity and net interest income sensitivity under normal and exceptional changes in interest rates.

Risk related to the recognition of the main part of deferred tax assets as regulatory capital or as an asset

The Group currently includes deferred tax assets (“DTAs”) in calculating the Group’s capital and capital adequacy ratios. As at 30 June 2018, the Group’s DTAs, excluding the amount of the DTA that was classified as non-current assets held for sale, were €4.9 billion (31 December 2017: €4.9 billion).

The Bank reviews the carrying amount of its DTAs at each reporting date, and such review may lead to a reduction in the value of the DTAs on the Bank’s statement of financial position, and therefore reduce the value of the DTAs as included in the Group’ s regulatory capital.

EU Regulation 575/2013 provides that DTAs recognized for IFRS purposes that rely on future profitability and arise from temporary differences of a credit institution and exceed certain thresholds must be deducted from its CET1 capital. This deduction is implemented gradually until 2019.

The deduction would have a significant impact on Greek credit institutions, including the Bank. However, as a measure to mitigate the effects of the deduction, article 27A of Greek Law 4172/2013, (“DTC Law”), as currently in force, allows credit institutions, under certain conditions, and from 2017 onwards to convert DTAs arising from (a) private sector initiative (“PSI”) losses, (b) accumulated provisions for credit losses recognized as at 30 June 2015, (c) losses from final write off or the disposal of loans and (d) accounting write offs, which will ultimately lead to final write offs and losses from disposals, to a receivable (“Tax Credit”) from the Greek State. Items (c) and (d) above were added with Greek Law 4465/2017 enacted on 29 March 2017. The same Greek Law 4465/2017 provided that Tax Credit cannot exceed the tax corresponding to accumulated provisions recorded up to 30 June 2015 less (a) any definitive and cleared Tax Credit, which arose in the case of accounting loss for a year according to the provisions of par.2 of article 27A, which relate to the above accumulated provisions, (b) the amount of tax corresponding to any subsequent specific tax provisions, which relate to the above accumulated provisions and (c) the amount of the tax corresponding to the annual amortization of the debit difference that corresponds to the above provisions and other losses in general arising due to credit risk.

Furthermore, Greek Law 4465/2017 amended article 27 “Carry forward losses” by introducing an amortization period of 20 years for losses due to loan write offs as part of a settlement or restructuring and losses that crystallize as a result of a disposal of loans.

As at 30 June 2018, Group’s eligible DTAs amounted to €4.7 billion (31 December 2017: €4.7 billion). The main condition for the conversion of DTAs to a Tax Credit is the existence of an accounting loss on a solo basis of a respective year, starting from accounting year 2016 and onwards. The Tax Credits will be calculated as a ratio of IFRS accounting losses to net equity (excluding the year’s losses) on a solo basis and such ratio will be applied to the remaining Eligible DTAs in a given year to calculate the Tax Credit that will be converted in that year, in respect of the prior tax year. The Tax Credit may be offset against income taxes payable. The non-offset part of the Tax Credit is immediately recognized as a receivable from the Greek State. The Bank will issue conversion rights to the Greek State for an amount of 100% of the Tax Credit in favour of the Greek State that was not offset against income taxes payable and will create a specific reserve for an equal amount. Common shareholders have pre-emption rights on these conversion rights. The reserve will be capitalized with the issuance of common shares in favour of the Greek State. This legislation allows credit institutions to treat such DTAs as not “relying on future profitability” according to CRD IV, and as a result such DTAs are not deducted from CET1, hence improving a credit institution’s capital position.

On 7 November 2014, the Bank convened an extraordinary General Shareholders Meeting which resolved to include the Bank in the DTC Law. An exit by the Bank from the provisions of the DTC Law requires regulatory approval and a General Shareholders meeting resolution.

If the regulations governing the use of DTCs as part of the Group’s regulatory capital change, this may affect the Group’s capital base and consequently its capital ratios. As at 30 June 2018, 79.8% of the Group’s CET1 capital was comprised of DTC. Additionally, there can be no assurance that any final interpretation of the amendments described above will not change or that the European Commission will not rule the treatment of the DTCs under Greek law illegal and as a result Greek credit institutions will ultimately not be allowed to maintain certain DTCs as regulatory capital. If any of these risks materialize, this could have a material adverse effect on the Group’s ability to maintain sufficient regulatory capital, which may in turn require the Group to issue additional instruments qualifying as regulatory capital, to liquidate assets, to curtail business or to take any other actions, any of which may have a material adverse effect on the Group’s operating results and financial condition and prospects.

Related party transactions

Based on the existing regulatory framework, the Group must disclose any transaction between the Bank and all its related parties as defined in IAS 24, which took place during the six-month period ended 30 June 2018. Management’s total compensation, receivables and payables must be also disclosed separately. For further details, see Note 15. The following table presents the transactions between the Bank and its subsidiaries, while there are no significant transactions with its associates.

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Athens, 31 August 2018

THE CHIEF EXECUTIVE OFFICER

PAUL K. MYLONAS

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Appendix for alternative performance measures

The definitions of NBG’s Group selected figures (ratios/measures) are presented in the table below:

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The Directors’ report contains financial information and measures as derived from the Groups and the Bank’s financial statements for the period ended 30 June 201 8 and for the year ended 31 December 2017, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as endorsed by the EU. Additionally, it contains financial data which is compiled as a normal part of our financial reporting and management information systems. For instance, financial items are categorized as foreign or domestic on the basis of the jurisdiction of organization of the individual Group entity whose separate financial statements record such items.

Moreover, it contains references to certain measures which are not defined under IFRS, including “pre-provision income” (“PPI”), “net interest margin” and others, as defined above. These measures are non-IFRS financial measures. A non-IFRS financial measure is a measure that measures historical or future financial performance, financial position or cash flows but which excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. The Group believes that the non-IFRS financial measures it presents allow a more meaningful analysis of the Group’s financial condition and results of operations. However, the non-IFRS financial measures presented are not a substitute for IFRS measures.

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(Translation from the original text in Greek)

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Athens, 31 August 2018

The notes on pages 34 to 71 form an integral part of these financial statements

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