Eurobank Ergasias Services and Holdings S.A.

Quarterly Report • May 31, 2018

FOR THE THREE MONTHS ENDED

31 MARCH 2018

8 Othonos Street, Athens 105 57, Greece www.eurobank.gr, Tel.: (+30) 210 333 7000 General Commercial Registry Νο: 000223001000

Index to the Condensed Consolidated Interim Financial StatementsPage
Consolidated Interim Balance Sheet1
Consolidated Interim Income Statement2
Consolidated Interim Statement of Comprehensive Income 3
Consolidated Interim Statement of Changes in Equity4
Consolidated Interim Cash Flow Statement 5

1.	General information 6
2.	Basis of preparation and principal accounting policies6
2.1	Basis of preparation6
2.2	IFRS 9 'Financial Instruments' – Changes to significant accounting policies10
2.3	IFRS 9 'Financial Instruments' – Impact of adoption17
3.	Significant accounting estimates and judgments in applying accounting policies 23
4.	Credit exposure to Greek sovereign debt25
5.	Capital Management 26
6.	Segment information28
7.	Earnings per share 31
8.	Operating expenses31
9.	Impairment allowance for loans and advances to customers32
10.	Other impairments, restructuring costs and provisions32
11.	Income tax 33
12.	Discontinued operations36
13.	Loans and advances to customers38
14.	Investment securities40
15.	Shares in subsidiary undertakings 42
16.	Investments in associates and joint ventures44
17.	Investment property45
18.	Other assets45
19.	Due to central banks45
20.	Due to credit institutions46
21.	Due to customers46
22.	Debt securities in issue 46
23.	Other liabilities47
24.	Ordinary share capital, share premium and treasury shares48
25.	Preferred securities 48
26.	Fair value of financial assets and liabilities49
27.	Cash and cash equivalents and other information on Interim Cash Flow Statement52

28.	Contingent liabilities and other commitments53
29.	Post balance sheet events54
30.	Related parties54
31.	Board of Directors55

Consolidated Interim Balance Sheet

		31 March	31 December
		2018	2017
	Note	€ million	€ million
ASSETS
Cash and balances with central banks		1,902	1,524
Due from credit institutions		2,033	2,123
Securities held for trading		92	49
Derivative financial instruments		1,701	1,878
Loans and advances to customers	13	36,094	37,108
Investment securities	14	6,997	7,605
Investments in associates and joint ventures	16	152	156
Property, plant and equipment		387	390
Investment property	17	288	277
Intangible assets		158	152
Deferred tax assets	11	4,891	4,859
Other assets	18	1,809	1,724
Assets of disposal groups classified as held for sale	12	2,008	2,184
Total assets		58,512	60,029
LIABILITIES
Due to central banks	19	7,080	9,994
Due to credit institutions	20	5,266	3,997
Derivative financial instruments		1,719	1,853
Due to customers	21	35,260	33,843
Debt securities in issue	22	1,510	549
Other liabilities	23	804	684
Liabilities of disposal groups classified as held for sale	12	1,827	1,959
Total liabilities		53,466	52,879
EQUITY
Ordinary share capital	24	655	655
Share premium	24	8,054	8,055
Reserves and retained earnings		(3,708)	(2,556)
Preference shares	22	-	950
Total equity attributable to shareholders of the Bank		5,001	7,104
Preferred securities	25	43	43
Non controlling interests		2	3
Total equity		5,046	7,150
Total equity and liabilities		58,512	60,029

Consolidated Interim Income Statement

		Three months ended 31 March
		2018	2017
	Note	€ million	€ million
Net interest income		355	357
Net banking fee and commission income		61	62
Income from non banking services		3	3
Net trading income	4	8	25
Gains less losses from investment securities	14	24	14
Other income/(expenses)		1	(2)
Operating income		452	459
Operating expenses	8	(219)	(222)
Profit from operations before impairments, provisions
and restructuring costs		233	237
Impairment losses on loans and advances to customers	9	(167)	(184)
Other impairment losses and provisions	10	(2)	(2)
Restructuring costs	10	(36)	(1)
Share of results of associates and joint ventures	16	12	1
Profit before tax		40	51
Income tax	11	(8)	(18)
Net profit from continuing operations		32	33
Net profit from discontinued operations	12	3	9
Net profit		35	42
Net profit attributable to non controlling interests		0	5
Net profit attributable to shareholders		35	37
		€	€
Earnings per share
-Basic and diluted earnings per share	7	0.02	0.02
Earnings per share from continuing operations
-Basic and diluted earnings per share	7	0.01	0.02

Consolidated Interim Statement of Comprehensive Income

		Three months ended 31 March
	2018		2017
	€ million		€ million
Net profit		35		42
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Cash flow hedges
- changes in fair value, net of tax	5		11
- transfer to net profit, net of tax	(4)	1	(1)	10
Debt securities at FVOCI
- changes in fair value, net of tax (note 4)	(61)		-
- transfer to net profit, net of tax	(20)	(81)	-	-
Available for sale securities
- changes in fair value, net of tax	-		19
- transfer to net profit, net of tax	-	-	(3)	16
Foreign currency translation
- changes in fair value, net of tax	(5)	(5)	(5)	(5)
Associates and joint ventures
- changes in the share of other comprehensive
income, net of tax (note 16)	(16)	(16)	4	4
Other comprehensive income		(101)		25
Total comprehensive income attributable to:
Shareholders
- from continuing operations	(70)		60
- from discontinued operations	4	(66)	2	62
Non controlling interests
- from continuing operations	0		(0)
- from discontinued operations	0	0	5	5
		(66)		67

Consolidated Interim Statement of Changes in Equity

(1) Further information on the restatement due to change in accounting policy is provided in note 52 of the Consolidated Financial Statements for the year ended 31 December 2017.

Consolidated Interim Cash Flow Statement

		Three months ended 31 March
		2018	2017
	Note	€ million	€ million
Cash flows from continuing operating activities
Profit before income tax from continuing operations		40	51
Adjustments for :
Impairment losses on loans and advances to customers	9	167	184
Other impairment losses, provisions and restructuring costs	10	38	3
Depreciation and amortisation	8	16	15
Other (income)/losses οn investment securities	27	(44)	(26)
Other adjustments		5	3
		222	230
Changes in operating assets and liabilities
Net (increase)/decrease in cash and balances with central banks		(217)	(154)
Net (increase)/decrease in securities held for trading		(45)	(7)
Net (increase)/decrease in due from credit institutions		47	136
Net (increase)/decrease in loans and advances to customers		(153)	106
Net (increase)/decrease in derivative financial instruments		89	76
Net (increase)/decrease in other assets		(121)	32
Net increase/(decrease) in due to central banks and credit institutions		(1,650)	(207)
Net increase/(decrease) in due to customers		1,416	(248)
Net increase/(decrease) in other liabilities		25	(71)
		(609)	(337)
Income tax paid		(4)	(3)
Net cash from/(used in) continuing operating activities		(391)	(110)
Cash flows from continuing investing activities
Acquisition of fixed and intangible assets		(22)	(19)
Proceeds from sale of fixed and intangible assets		8	8
(Purchases)/sales and redemptions of investment securities		465	90
Acquisition of subsidiaries, net of cash acquired	15	(7)	-
Acquisition of holdings in associates and joint ventures and
participations in capital increases		-	(8)
Net cash from/(used in) continuing investing activities		444	71
Cash flows from continuing financing activities
(Repayments)/proceeds from debt securities in issue	22	(2)	(3)
Capital return from discontinued operations	27	51	-
Preferred securities' dividend paid		(0)	-
(Purchase)/sale of treasury shares		(2)	(1)
Net contribution by non controlling interests (NCI)		(1)	-
Redemption of preference shares, net of expenses	22	(4)	-
Net cash from/(used in) continuing financing activities		42	(4)
Effect of exchange rate changes on cash and cash equivalents		(0)	(0)
Net increase/(decrease) in cash and cash equivalents from continuing operations		95	(43)
Net cash flows from discontinued operating activities		(104)	32
Net cash flows from discontinued investing activities		1	(35)
Net cash flows from discontinued financing activities	27	(51)	-
Effect of exchange rate changes on cash and cash equivalents		0	(1)
Net increase/(decrease) in cash and cash equivalents from discontinued operations		(154)	(4)
Cash and cash equivalents at beginning of period	27	2,143	1,697
Cash and cash equivalents at end of period	27	2,084	1,650

Eurobank Ergasias S.A. (the Bank) and its subsidiaries (the Group) are active in retail, corporate and private banking, asset management, treasury, capital markets and other services. The Bank is incorporated in Greece and its shares are listed on the Athens Stock Exchange. The Group operates mainly in Greece and in Central and Southeastern Europe.

These condensed consolidated interim financial statements were approved by the Board of Directors on 29 May 2018.

2. Basis of preparation and principal accounting policies

The principal accounting policies applied in the preparation of the condensed consolidated interim financial statements are set out below:

2.1 Basis of preparation

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted by the European Union (EU) and they should be read in conjunction with the Group's published consolidated annual financial statements for the year ended 31 December 2017. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current period. Except as indicated, financial information presented in euro has been rounded to the nearest million.

The accounting policies and methods of computation in these condensed consolidated interim financial statements are consistent with those in the published consolidated annual financial statements for the year ended 31 December 2017, except as described below.

Going concern considerations

The interim financial statements have been prepared on a going concern basis, as the Board of the Directors considered as appropriate, taking into consideration the following:

Macroeconomic environment

In 2018, Greece's real GDP is expected to grow by 1.9%, according to the May 2018 forecast by European Commission (2017: 1.4%, according to the Hellenic Statistical Authority's (ELSTAT) estimate). Based on ELSTAT and Ministry of Finance data, the unemployment rate in February 2018 was at 20.8%, remaining stable as in December 2017 and the 2017 primary surplus was at 4.2% of GDP, outperforming the respective 2017 Third Economic Adjustment Program (TEAP) target of 1.75% of GDP.

Greece nears the completion of the cycle of economic adjustment programs. The conclusion of the fourth and final review of the TEAP, which is expected in June 2018 following the staff-level agreement (SLA) reached by the Institutions and Greek authorities on 19 May 2018, an expected significant rise in investments (2018 Budget estimate at 11.4% compared to 9.6% increase in 2017), and a forecasted strong tourism season support expectations for a further improvement in domestic economic activity in 2018. The decisive implementation of the reforms agreed in the context of the TEAP, the implementation of further debt relief measures in accordance with 24 May 2016 Eurogroup decisions, the mobilization of European Union (EU) funding to support domestic investment and job creation, the attraction of foreign and domestic capital and the adoption of an extrovert economic development model will improve the confidence in the prospects of the Greek economy and the further stabilization of the domestic economic environment.

Currently, the relation between Greece and the European Institutions in the post program period, as well as the parameters of the sovereign debt relief proposal, the nature of a safety cash buffer that would facilitate its market access after the end of the program in August 2018 and the establishment of a framework that secures the continuation of reforms in the Greek economy, are under discussion. The main risks and uncertainties are associated with (a) the possible delays in the implementation of the reforms' agenda in order to meet the remaining targets and milestones of the TEAP, (b) the possible delays in the agreement of the postprogram relation between Greece and the Institutions, (c) an agreement regarding debt relief measures that may be conceived by the markets that is not sufficient or includes too many conditionalities, (d) the impact on the level of economic activity and on the attraction of direct investments from the fiscal and social security-related measures agreed under the reviews of the TEAP, (e) the ability to attract new investments in the country, (f) the timing of a full lift of restrictions in the free movement of capital and the respective impact on the level of economic activity, (g) the possible slow pace of deposits inflows and/ or possible delays in the

effective management of non-performing exposures (NPEs) as a result of the macroeconomic conditions in Greece and (h) the geopolitical conditions in the near or in broader region and the external shocks from a slowdown in the global economy. The Group monitors closely the developments in the Greek macroeconomic environment taking into account its direct and indirect exposure to sovereign risk (note 4).

Liquidity risk

The gradual stabilisation of the macroeconomic environment in Greece has enhanced Greece's credibility towards the international markets, improved the domestic economic sentiment and facilitated the return of deposits as well as the further relaxation of capital controls. The successful completion of the fourth review of the TEAP and an agreement on the post-program relation of Greece with its official creditors and on meaningful debt relief measures, will help further reinstating depositors' confidence and it will positively influence the financing of the economy.

As at 31 March 2018, the Group's deposits inflows of € 1.4 bn (of which € 1.3 bn in Greece), along with the increased market repos on covered bonds and Greek Government Bonds resulted in the significant decrease of the Bank's dependency from the Eurosystem to € 7.1 bn at the end of March 2018, of which € 5.7 bn funding from ELA, (31 December 2017: € 10 bn, of which € 7.9 bn from ELA). Οn 30 April 2018, the Eurosystem funding further declined to € 5.5 bn, of which € 4.1 bn from ELA (note 19).

Solvency risk

On 5 May 2018, the ECB announced the results of the Stress Test (ST) for the four Greek systemic banks, including Eurobank. Based on feedback received by the Single Supervisory Mechanism (SSM), the ST outcome pointed to no capital shortfall and no capital plan needed for the Bank as a result of the exercise. Going forward, a key priority remains the active management of NPEs, with the aim to substantially reduce their stock in accordance with the Bank's operational targets and taking advantage of the Group's internal infrastructure, the important legislative changes and the external partnerships that have taken or are expected to take place. As at 31 March 2018, the Bank has reduced its NPEs stock by € 2.5 bn since 31 March 2017 to € 17.8 bn, outperforming the respective target submitted to SSM in September 2017 by € 0.3 bn (note 13).

The Group's Common Equity Tier 1 (CET1) ratio stood at 14.8% at 31 March 2018, (15.1% pro-forma ratio with the completion of the disposal of the Romanian subsidiaries classified as held for sale) (note 5) and the net profit attributable to shareholders amounted to € 35 million (€ 57 million net profit from continuing operations before restructuring costs) for the period ended 31 March 2018.

Going concern assessment

The Board of Directors, taking into consideration the above factors relating to the adequacy of the Group's capital position, as also evidenced by the performance to the ST, the outperformance of NPEs reduction targets and its anticipated continued access to Eurosystem funding over the foreseeable future, has been satisfied that the financial statements of the Group can be prepared on a going concern basis.

2.1.1 New and amended standards and interpretations adopted by the Group

The following new and amended standards and interpretations, as issued by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IC) and endorsed by the European Union (EU), apply from 1 January 2018:

IAS 40, Amendment-Transfers of Investment Property

The amendment clarifies that a transfer of property, including property under construction or development, into or out of investment property should be made only when there has been a change in use of the property. Such a change in use occurs when the property meets, or ceases to meet, the definition of investment property and should be supported by evidence.

The adoption of the amendment had no impact on the Group's condensed consolidated interim financial statements.

IFRS 2, Amendment-Classification and Measurement of Share-based Payment Transactions

The amendment addresses (a) the measurement of cash-settled share-based payments, (b) the accounting for modifications of a share-based payment from cash-settled to equity-settled and c) the classification of share-based payments settled net of tax withholdings.

Specifically, the amendment clarifies that a cash-settled share-based payment is measured using the same approach as for equitysettled share-based payments. It also clarifies that the liability of cash- settled share-based payment modified to equity-settled one

is derecognized and the equity-settled share-based payment is recognized at the modification date fair value of the equity instrument granted and any difference is recognized in profit or loss immediately.

Furthermore, a share-based payment net by withholding tax on the employee's behalf (a net settlement feature) is classified as equity settled in its entirety, provided it would have been classified as equity-settled had it not included the net settlement feature.

The adoption of the amendment had no impact on the Group's condensed consolidated interim financial statements.

IFRS 4, Amendment-Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts

The amendment addresses the accounting consequences of the different effective dates of IFRS 9 'Financial Instruments' and the forthcoming new insurance contracts Standard. It introduces two options for entities that issue insurance contracts: a temporary exemption from applying IFRS 9 and an overlay approach.

The optional temporary exemption from IFRS 9 is available to entities whose activities are predominantly connected with insurance, allowing them to continue to apply IAS 39 'Financial Instruments: Recognition and Measurement' while they defer the application of IFRS 9 until 1 January 2021 at the latest.

The overlay approach is an option for entities that adopt IFRS 9 and issue insurance contracts, to adjust profit or loss for eligible financial assets, effectively resulting in IAS 39 accounting for those designated financial assets. This approach can be used provided that the entity applies IFRS 9 in conjunction with IFRS 4 and classifies financial assets as fair value through profit or loss in accordance with IFRS 9, when those assets were previously classified at amortized cost or as available-for-sale in accordance with IAS 39.

The amendment is not relevant to the Group's activities, other than through its associate Eurolife ERB Insurance Group Holdings S.A., which has elected the optional temporary exemption from IFRS 9.

IFRS 15, Revenue from Contracts with Customers and IFRS 15 Amendments

IFRS 15 establishes a single, comprehensive revenue recognition model for determining when and how much revenue to recognize and replaces existing revenue recognition guidance, including IAS 18 'Revenue', IAS 11 'Construction Contracts' and IFRIC 13 'Customer Loyalty Programs'.

IFRS 15 applies to all contracts with customers, except those in the scope of other standards such as:

• Financial instruments and other contractual rights or obligations within the scope of IFRS 9 'Financial Instruments', IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', IAS 27 'Separate Financial Statements' and IAS 28 'Investments in Associates and Joint Ventures';

• Lease contracts within the scope of IAS 17 'Leases' (or IFRS 16 'Leases'); and

• Insurance contracts within the scope of IFRS 4 'Insurance Contracts'.

Therefore, interest and fee income integral to financial instruments will continue to fall outside the scope of IFRS 15.

IFRS 15 specifies that revenue should be recognized at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services. It introduces the concept of recognizing revenue for performance obligations as they are satisfied and the control of a good or service (i.e. the ability to direct the use of and obtain the benefits from them), is obtained by the customer. For services provided over time, such as management fee income earned for asset management services provided and variable performance fee income based on the return of the underlying asset at a particular date, consideration is recognized as the service is provided to the customer provided that it is probable that a significant reversal of consideration will not occur.

Extensive disclosures will be required in relation to revenue recognized and expected from existing contracts.

IFRS 15 was amended in April 2016 to provide several clarifications, including that in relation to the identification of the performance obligations within a contract.

The adoption of the standard had no significant impact on the Group's condensed consolidated interim financial statements as net interest income, which is a primary revenue stream of the Group, is not impacted by the adoption of IFRS 15 and the existing Group accounting treatment for revenue from contracts with customers is generally in line with IFRS 15.

IAS 28 'Investments in Associates and Joint Ventures': It is clarified that venture capital organizations, mutual funds, unit trusts and similar entities are allowed to elect measuring their investments in associates or joint ventures at fair value through profit or loss.

The adoption of the amendment had no impact on the Group's condensed consolidated interim financial statements.

IFRIC 22, Foreign Currency Transactions and Advance Consideration

IFRIC 22 provides requirements about which exchange rate to use in reporting foreign currency transactions that involve an advance payment or receipt. The interpretation clarifies that in this case, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income is the date of the advance consideration, i.e. when the entity initially recognized the non-monetary asset (prepayment asset) or non-monetary liability (deferred income liability) arising from the advance consideration. If there are multiple payments or receipts in advance, the entity must determine a date of transaction for each payment or receipt.

The adoption of the interpretation had no impact on the Group's condensed consolidated interim financial statements.

IFRS 9, Financial Instruments

On 1 January 2018, the Group adopted IFRS 9 'Financial Instruments', which replaces IAS 39, 'Financial Instruments: Recognition and Measurement'. The adoption of IFRS 9 in the first quarter of 2018 resulted in changes in accounting policy in two principal areas, classification and measurement of financial assets and liabilities and impairment of financial assets. The Group elected, as a policy choice permitted under IFRS 9, to continue to apply hedge accounting in accordance with IAS 39.

Differences arising from the adoption of IFRS 9 have been recognized directly in reserves and retained earnings as of 1 January 2018 and are disclosed in note 2.3. The Group has not restated comparative information for 2017 for financial instruments in the scope of IFRS 9.

Changes in the classification and measurement

IFRS 9 applies a new classification and measurement approach for all types of financial assets that reflects the entity's business model for managing the assets and their contractual cash flow characteristics.

To determine their classification and measurement category, IFRS 9 requires all financial assets, except equity instruments and derivatives, to be assessed based on a combination of the entity's business model for managing the assets and the instruments' contractual cash flow characteristics. Reclassifications between categories are made only in rare circumstances.

For the purpose of the transition to IFRS 9, the Group carried out a business model assessment across various portfolios for its debt instruments portfolios to determine any potential changes to the classification and measurement. The assessment has been performed based on the facts and circumstances that exist at the date of initial application i.e. 1 January 2018 (see section 2.3.2).

The IAS 39 categories of financial assets (fair value through profit or loss (FVTPL), available for sale (AFS), held-to-maturity (HTM) and Loans and Receivables) have been replaced by:

• Debt instruments measured at amortized cost
• Debt instruments measured at fair value through other comprehensive income (FVOCI), with gains or losses recycled to profit or loss on de-recognition
• Equity instruments at FVOCI, with no recycling of gains or losses to profit or loss on derecognition
• Financial assets measured at FVTPL

The Group may at initial recognition, designate a financial asset at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

Furthermore, on initial recognition of an equity instrument that is not held for trading, an entity may irrevocably elect to present subsequent changes in fair value in Other Comprehensive Income (OCI). This election is made on an investment-by-investment basis.

The IFRS 9 eligibility requirements for applying the fair value option to measure financial liabilities at FVTPL are consistent with those of IAS 39. However, for financial liabilities designated at FVTPL, gains or losses attributable to changes in own credit risk shall be presented in OCI and shall not be subsequently transferred to profit or loss unless such a presentation would create or enlarge an accounting mismatch.

Finally, under IFRS 9, embedded derivatives are no longer separated from a host financial asset. Instead, financial assets are classified based on the business model and their contractual terms. The accounting for derivatives embedded in financial liabilities and in non-financial host contracts has not changed.

The Group's classification of its financial assets and liabilities is explained in Section 2.2 of this note. The quantitative impact of applying IFRS 9 as at 1 January 2018 is disclosed in note 2.3.2.

Changes to the impairment calculation

The adoption of IFRS 9 has changed significantly the Group's accounting for loan loss impairments by replacing IAS 39 incurred loss approach with a forward-looking expected credit loss (ECL) approach, which requires the use of complex models and significant judgment about future economic conditions and credit behavior.

IFRS 9 requires the Group to record an allowance for credit loss for all loans and other debt financial assets not held at FVTPL, together with loan commitments and financial guarantee contracts, which are off-balance sheet. The allowance is based on the ECL calculation on the basis of a related probability of default of the debtor in the next twelve months unless there has been a significant increase in credit risk since origination of the exposure, when lifetime ECL is measured. If the financial asset meets the definition of purchased or originated credit impaired (POCI), the allowance is based on the change in the ECL over the life of the asset.

Details of the Group's impairment policy are disclosed in Section 2.2 of this note. The quantitative impact of applying IFRS 9 as at 1 January 2018 is disclosed in note 2.3.2.

Hedge accounting under IFRS 9

IFRS 9 includes a new general hedge accounting model which aligns hedge accounting more closely with risk management. Under the new model, more hedging strategies may qualify for hedge accounting, new hedge effectiveness requirements apply and discontinuation of hedge accounting will be allowed only under specific circumstances. The IASB currently has a separate project for the accounting of macro hedging activities. Until the above project is completed, entities have an accounting policy choice to continue applying the hedge accounting requirements in IAS 39.

The Group has elected to continue applying IAS 39.

Consequential changes in Disclosures (IFRS 7 'Financial Instruments: Disclosures')

Due to the changes in IFRS 9, these Financial Statements include transition disclosures which provide qualitative and quantitative information about the impact from the Classification and Measurement and ECL requirements. The new disclosures for hedge accounting will be included in the annual financial report of the Group for the period ending 31 December 2018, as there is no change in the accounting policies since the last annual financial statements of the Group (31 December 2017).

2.2 IFRS 9 'Financial Instruments' – Changes to significant accounting policies

As a result of transition to IFRS 9, the following significant accounting policies replace the respective accounting policies in accordance with IAS 39 that were in effect until 31 December 2017 as disclosed in note 2.2 of the consolidated financial statements for the year ended 31 December 2017. The below changes are applicable from 1 January 2018.

The amended accounting policies remain subject to change until the Group finalizes its financial statements for the year ending 31 December 2018.

(i) Financial assets and liabilities - Classification and measurement

The Group classifies all of its financial assets based on the business model for managing those assets and their contractual cash flow characteristics. Accordingly, financial assets are classified into one of the following measurement categories: amortized cost, fair value through other comprehensive income or fair value through profit or loss.

Financial Assets measured at Amortized Cost ('AC')

The Group classifies and measures a financial asset at AC only if both of the following conditions are met:

(a) The financial asset is held within a business model whose objective is to collect contractual cash flows (hold-to-collect business model) and

(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

These financial assets are recognized initially at fair value plus direct and incremental transaction costs, and are subsequently measured at amortized cost, using the effective interest rate (EIR) method, net of an allowance for expected credit losses (ECL).

Interest income, realized gains and losses on derecognition, and changes in credit impairment losses from assets classified as AC, are included in the income statement.

Financial Assets measured at Fair Value through Other Comprehensive Income ('FVOCI')

The Group classifies and measures a financial asset at FVOCI only if both of the following conditions are met:

(a) The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (hold-to-collect-and-sell business model) and

(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

Financial assets that meet these criteria are debt instruments and are measured initially at fair value, plus direct and incremental transaction costs.

Subsequent to initial recognition, FVOCI debt instruments are re-measured at fair value through OCI, except for interest income, related foreign exchange gains or losses and credit impairment losses, which are recognized in the income statement. Cumulative gains and losses previously recognized in OCI are transferred from OCI to the income statement when the debt instrument is derecognised.

Equity Instruments designated at FVOCI

The Group may make an irrevocable election to designate an equity instrument at FVOCI. This designation, if elected, is made at initial recognition and on an instrument by instrument basis. Gains and losses on these instruments, including when derecognized, are recorded in OCI and are not subsequently reclassified to the income statement. Dividends received are recorded in the income statement.

Financial Assets measured at Fair Value through Profit and Loss ("FVTPL")

The Group classifies and measures all other financial assets that are not classified at AC or FVOCI, at FVTPL. Accordingly, this measurement category includes debt instruments such as loans and debt securities that are held within the hold–to-collect (HTC) or hold-to-collect-and-sell models (HTCS), but fail the SPPI assessment, equities that are not designated at FVOCI, financial assets held for trading and derivative financial instruments.

Furthermore, a financial asset that meets the above conditions to be classified at AC or FVOCI, may be designated by the Group at FVTPL at initial recognition, if doing so eliminates, or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets measured at FVTPL are initially recorded at fair value and any unrealized gains or losses arising due to changes in fair value are included in the income statement.

Financial Liabilities designated at FVTPL

Financial liabilities are designated at FVTPL when one of the following criteria is met:

• The designation eliminates or significantly reduces an accounting mismatch which would otherwise arise; or
• The financial liability contains one or more embedded derivatives which significantly modify the cash flows otherwise required.

Financial liabilities designated at FVTPL are initially recognized at fair value. Changes in fair value are recognized in the income statement, except for changes in fair value attributable to changes in the Group's own credit risk, which are recognised in OCI and are not subsequently reclassified to the income statement upon derecognition of the liabilities. However, if this treatment of the effects of changes in a liability's credit risk would create or enlarge an accounting mismatch in the income statement, all gains or losses of this financial liability designated at FVTPL, including the effects of changes in the credit risk, are recognized in the income statement.

Business model and contractual characteristics assessment

The business model assessment determines how the Group manages a group of assets to generate cash flows. That is, whether the Group's objective is solely to collect contractual cash flows from the asset, to realize cash flows from the sale of assets, or both to collect contractual cash flows and cash flows from the sale of assets.

The Group performs the business model assessment consistently with its operating model, considering the objectives and performance of each portfolio, and the information provided to key management personnel.

Accordingly, in making the above assessment, the Group will consider a number of factors including the risks associated with the performance of the business model and how those risks are evaluated and managed, the related personnel compensation, and the frequency, volume and reasons of past sales, as well as expectations about future sales activity.

Types of business models

The Group's business models fall into three categories, which are indicative of the key strategies used to generate returns.

The hold-to-collect (HTC) business model has the objective to hold the financial assets in order to collect contractual cash flows. Sales within this model are monitored and may be performed for reasons which are not inconsistent with this business model. Such reasons may relate to an increase in credit risk regardless of the frequency and volume, to liquidity needs in any stress case scenario, or to sales made close to the maturity and to sales made to manage high concentration level of credit risk. Debt instruments classified within this business model are measured at amortized cost subject to meeting the SPPI assessment criteria.

The hold-to-collect-and-sell business model (HTC&S) has the objective both to collect contractual cash flows and sell the assets. Activities such as liquidity management, interest yield and duration are consistent with this business model, while sales of assets are integral to achieving the objectives of this business model.

Debt instruments classified within this business model are measured at FVOCI, subject to meeting the SPPI assessment criteria.

Other business models include financial assets which are managed and evaluated on a fair value basis as well as portfolios that are held for trading. This is a residual category for financial assets not meeting the criteria of the business models of HTC or HTC&S, while the collection of contractual cash flows may be incidental to achieving the business models' objective.

Cash flow characteristics assessment

For a financial instrument to be measured at AC or FVOCI, its contractual terms must give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

In assessing whether the contractual cash flows are SPPI, the Group will consider whether the contractual terms of the instrument are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin. On the initial recognition of a financial asset, an assessment is performed of whether the asset contains a contractual term that could change the amount or timing of contractual cash flows in a way that it would not be consistent with the above condition. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is considered to have failed the SPPI assessment and will be measured at FVTPL.

For the purpose of the SPPI assessment, the Group considers the existence of various features, including among others, contractually linked terms, prepayment, extension and equity conversion options, terms that introduce leverage, non-recourse asset arrangements that limit the Group's claim to cash flows from specified assets and modified time value of money element.

The Group performs the SPPI assessment for its lending exposures on a product basis for the retail and part of the wholesale portfolio where contracts are of standardized form, whereas for the remaining wholesale portfolio the assessment is performed on an individual basis.

The respective accounting policies regarding classification and measurement of financial assets and liabilities applicable under IAS 39 are set out in notes 2.2.9 and 2.2.10 of the consolidated financial statements for the year ended 31 December 2017.

(ii) Reclassifications of financial assets and liabilities

The Group reclassifies a financial asset only when it changes its business model for managing financial assets. Generally, a change in the business model is expected to be rare and occurs when the Group either begins or ceases to perform an activity that is significant to its operations; for example, when a business line is acquired, disposed of or terminated.

Changes in intention related to particular financial assets (even in circumstances of significant changes in market conditions), the temporary disappearance of a particular market for financial assets or a transfer of financial assets between parts of the Group with different business models, are not considered by the Group changes in business model.

The reclassification is applied prospectively from the reclassification date, therefore previously recognized gains, losses (including impairment losses) or interest are not restated.

Financial liabilities are not reclassified according to IFRS 9.

The respective accounting policy regarding reclassification of financial assets applicable under IAS 39 are set out in note 2.2.25 of the consolidated financial statements for the year ended 31 December 2017.

(iii) Impairment of financial assets

The Group recognizes expected credit losses (ECL) that reflect changes in credit quality since initial recognition to financial assets that are measured at AC and FVOCI, including loans, lease receivables, debt securities, financial guarantee contracts, and loan commitments. No ECL are recognized on equity investments.

ECL are a probability-weighted average estimate of credit losses that reflects the time value of money. Upon initial recognition of the financial instruments in scope of the impairment policy, the Group records a loss allowance equal to 12-month ECL, being the ECL that result from default events that are possible within the next twelve months. Subsequently, for those financial instruments that have experienced a significant increase in credit risk (SICR) since initial recognition, a loss allowance equal to lifetime ECL is recognized, arising from default events that are possible over the expected life of the instrument. If upon initial recognition, the financial asset meets the definition of purchased or originated credit impaired (POCI), the loss allowance is based on the change in the ECL over the life of the asset.

Accordingly, ECL are recognized using a three-stage approach based on the extent of credit deterioration since origination:

• Stage 1 Where there has not been a significant increase in credit risk since initial recognition of a financial instrument, an amount equal to 12-months ECL is recorded. The 12 – month ECL represent a portion of lifetime losses, that result from default events that are possible within the next 12 months after the reporting date and is equal to the expected cash shortfalls over the life of the instrument or group of instruments, due to loss events probable within the next 12 months.
• Stage 2 When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. Lifetime ECL represent the expected credit losses that result from all possible default events over the expected life of the financial instrument.
• Stage 3 Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected credit losses.
• POCI- Purchased or originated credit impaired (POCI) assets are financial assets that are credit impaired on initial recognition. ECL are only recognized or released to the extent that there is a subsequent change in the assets' lifetime expected credit losses.

Definition of default

To determine the risk of default, the Group applies a default definition for accounting purposes, which is consistent with the European Banking Authority (EBA) definitions. In particular, the Group will determine that financial instruments are in stage 3 by applying consistent measures of default across all of its portfolios:

• the objective criterion of 90 days past due and;
• the existence of unlikeness to pay (UTP) criteria, whereby the borrower's ability to repay his credit obligations in full without realization of collateral is assessed as unlikely, regardless the existence of any past due amounts or the number of days past due.

Accordingly, the Group considers all non-performing exposures in accordance with EBA definitions as credit-impaired and classifies those exposures in stage 3 for financial reporting purposes.

Purchased or originated credit impaired financial assets (POCI)

The Group defines a financial asset as POCI when one or more events that have a detrimental impact on the estimated future cash flows of that exposure have occurred (at time of purchase or origination). The Group considers the following as indicative detrimental events:

• The borrower faces a significant difficulty in meeting his financial obligations.
• There has been a breach of contract, such as a default or past due event.
• The Group, for economic or contractual reasons relating to the borrower's financial difficulty, has granted to the borrower a concession(s) that the Group would not otherwise consider.
• It is becoming probable that the borrower will enter bankruptcy or other financial re-organization.
• The Group purchases a financial asset at a deep discount that reflects incurred credit losses.

The Group assesses the deep discount criterion following a principles-based approach with the aim to incorporate all reasonable and supportable information which reflects market conditions that exist at the time of the assessment.

POCI exposures are not subject to stage allocation as these exposures are credit impaired at the date of initial recognition by the Group and are always measured on the basis of lifetime expected credit losses.

Significant increase in credit risk (SICR) and staging allocation

Determining whether a loss allowance should be based on 12-month expected credit losses or lifetime expected credit losses depends on whether there has been a significant increase in credit risk (SICR) of the financial assets, issued loan commitments and financial guarantee contracts, since initial recognition.

At each reporting date, the Group performs an assessment as to whether the risk of a default occurring over the remaining expected lifetime of the exposure has been increased significantly from the expected risk of a default estimated at origination for that point in time.

The assessment for SICR is performed using both qualitative and quantitative criteria based on reasonable and supportable information that is available without undue cost or effort including forward looking information and macroeconomic scenarios as well as historical experience.

As a primary criterion for SICR assessment, the Group compares the residual lifetime probability of default (PD) at each reporting date to the residual lifetime PD for the same point in time which was expected at the origination.

The Group may also consider as a SICR indicator when the residual lifetime PD at each reporting date exceeds certain predetermined values. The criterion may be applied in order to capture cases where the relative PD comparison does not result to the identification of SICR although the absolute value of PD is at levels which are considered high based on the Group's risk appetite framework.

For a financial asset's risk, a threshold may be applied, normally reflected through the asset's forecasted PD, below which it is considered that no significant increase in credit risk compared to the asset's expected PD at origination date has taken place. In such a case the asset is classified at Stage 1 irrespectively of whether other criteria would trigger its classification at Stage 2. This criterion primarily applies to debt securities.

Internal credit risk rating (on a borrower basis), which incorporates borrower specific information, is also used as a basis for the identification of SICR with regards to lending exposures of the Wholesale portfolio. Specifically, the Group takes into consideration the changes of internal ratings by a certain number of notches. In addition, a watchlist status is also considered by the Group as a trigger for SICR identification.

Forbearance measures as monitored by the Group are considered as a SICR indicator and thus the exposures are allocated into Stage 2 upon forbearance. Furthermore, regardless of the outcome of the SICR assessment based on the above indicators, the credit risk of a financial asset is deemed to have increased significantly when contractual payments are more than 30 days past due.

Furthermore, Management may apply temporary collective adjustments when determining whether credit risk has increased significantly since initial recognition on exposures that share the same credit risk characteristics to reflect macro-economic or other factors which are not adequately addressed by the current credit risk models. These factors may depend on information such as the type of the exposure, counterparty's specific information and the characteristics of the financial instrument while their application requires the application of significant judgment.

Transfers from stage 2 to stage 1

A financial asset, which is classified to Stage 2 due to Significant Increase in Credit Risk (SICR), is reclassified to Stage 1, as long as it does not meet anymore any of the Stage 2 Criteria.

Where forbearance measures have been applied, the Group uses a probation period provided that the borrower has made payments for more than an insignificant aggregate amount of payments during the aforementioned probation period in order to fulfill the requirements for a transfer back to stage 1.

Transfers from stage 3 to stage 2

A financial asset is transferred from Stage 3 to Stage 2, when the criteria based on which the financial asset was characterized as impaired, are no longer valid.

Criteria for grouping of exposures based on shared credit risk characteristics

The assessment of loss allowance can be performed either on an individual basis or on a collective basis for groups of similar items with homogeneous credit risk characteristics. The Group applies the same principles for assessing SICR since initial recognition when estimating ECLs on a collective or on an individual basis.

The Group segments its lending exposures on the basis of shared credit risk characteristics for the purposes of both assessing significant increase in credit risk and measuring loan loss allowance on a collective basis. The different segments aim to capture differences in PDs and in the rates of recovery in the event of default.

The shared credit risk characteristics used for the segmentation of exposures include several elements such as: instrument type, portfolio type, asset class, product type, industry, originating entity, credit risk rating, remaining term to maturity, geographical location of the borrower, value of collateral to the financial asset, forbearance status and days in arrears.

The Group identifies individually significant exposures and performs the ECL measurement based on borrower specific information. This measurement is performed at a borrower level, hence the criteria are defined at this level, while both qualitative and quantitative factors are taken into consideration including forward looking information.

For the remaining retail exposures and some exposures to small and medium-sized enterprises, ECL are measured on a collective basis. This incorporates borrower specific information, collective historical experience of losses and forward-looking information. For debt securities, the measurement of impairment losses is performed on an individual debt security basis.

Measurement of Expected Credit Losses

The measurement of ECL is a probability-weighted average estimate of credit losses that reflects the time value of money. A credit loss is the difference between the cash flows that are due to the Group in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive (i.e. cash shortfalls) discounted at the original effective interest rate (EIR) of the same instrument, or the credit-adjusted EIR in case of purchased or originated credit impaired assets (POCI). In measuring ECL, information about past events, current conditions and reasonable and supportable forecasts of future conditions should be considered.

The Group estimates expected cash shortfalls, which reflect the cash flows expected from all possible sources, including collateral and other credit enhancements that are part of the contractual terms and are not recognized separately. In case of a collateralized financial instrument, the estimated expected cash flows related to the collateral reflect the amount and timing of cash flows that are expected from liquidation of the collateral less the discounted costs of obtaining and selling the collateral, irrespective of whether liquidation is probable.

ECL are calculated over the maximum contractual period over which the Group is exposed to credit risk, which is determined based on the substantive terms of the instrument, or in case of revolving credit facilities, by taking into consideration factors such as the Group's expected credit risk management actions to mitigate credit risk and past practice.

ECL Key Inputs

The ECL calculations are based on the term structures of the probability of default (PD), the loss given default (LGD), the exposure at default (EAD) and other input parameters such as the credit conversion factor (CCF) and the prepayment rate. Generally, the Group derives these parameters from internally developed statistical models and observed point-in-time and historical data, leveraging the existing infrastructure development for the regulatory framework and risk management practices.

The PD, LGD and EAD used for accounting purposes may differ from those used for regulatory purposes. PD under IFRS 9 is a pointin-time estimate whereas for regulatory purposes PD is a 'through-the-cycle' estimate. In addition, LGD and EAD for regulatory purposes are based on loss severity experienced during economic downturn conditions, while under IFRS 9, LGD and EAD reflect an unbiased and probability-weighted amount.

The PD represents the likelihood of default assessed on the prevailing economic conditions at the reporting date, adjusted to take into account estimates of future economic conditions that are likely to impact the risk of default, over a given time horizon.

The Group uses Point in Time (PiT) PDs in order to remove any bias towards historical data thus aiming to reflect management's view of the future as at the reporting date, incorporating relevant forward looking information including macroeconomic scenarios.

Two types of PD are used for calculating ECL:

• 12-month PD, which is the estimated probability of default occurring within the next 12 months (or over the remaining life of the financial asset if this is less than 12 months). It is used to calculate 12-month ECL for Stage 1 exposures.
• Lifetime PD, which is the estimated probability of a default occurring over the remaining life of the financial asset. It is used to calculate lifetime ECLs for Stage 2 and POCI exposures.

The Exposure at default (EAD) is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest and expected drawdowns on committed facilities. The EAD includes both on and off balance sheet exposures. The on balance sheet exposure corresponds to the total amount that has been withdrawn and is due to be paid, which includes the outstanding principal, accrued interest and any past due amounts. The off balance sheet exposure represents the credit that is available to be withdrawn, in excess of the on balance sheet exposure.

Furthermore, the CCF factor is used to convert the amount of a credit facility and other off-balance sheet amounts to an EAD amount. It is a modelled assumption which represents a proportion of any undrawn exposure that is expected to be drawn prior to a default event occurring.

In addition, the prepayment rate is an estimate of early prepayments on loan exposure in excess of the contractual repayment according to the repayment schedule and is expressed as a percentage applied to the EAD at each period, reducing the latter amount accordingly.

LGD represents the Group's expectation of the extent of loss on a defaulted exposure and it is the difference between the contractual cash flows due and those that the Group expects to receive including any amounts from collateral liquidation. LGD varies by type of counterparty, type and seniority of claim, availability of collateral or other credit support, and is usually expressed as a percentage of EAD. The Group distinguishes its portfolios into two broad categories i.e. secured and unsecured. The Group estimates the LGD component using cure rates that reflect cash recoveries, estimated proceeds from collateral liquidation, estimates for timing realization, realization costs, etc. Where the LGD's component values are dependent on macro – economic data, such types of dependencies are reflected by incorporating forward looking information, such as forecasted price indices into the respective models. The estimation of the aforementioned component values within LGD reflects available historical data which cover a reasonable period, i.e. a full economic cycle.

Forward-looking information

The measurement of expected credit losses for each stage and the assessment of significant increases in credit risk consider information about reasonable and supportable forecasts of future events and macroeconomic conditions. The estimation and application of forward-looking information requires significant judgment.

The Group uses, at a minimum, three macroeconomic scenarios (i.e. base, adverse and optimistic) to achieve the objective of measuring ECL in a way that reflects an unbiased and probability weighted outcome. The base scenario represents the most likely scenario and is aligned with the information used by the Group for strategic planning and budgeting purposes.

The scenarios are reflected in the risk parameters, and, namely 12-month PD, Lifetime PD and LGD, hence 3 sets of each of these parameters are used, in line with the scenarios developed.

The Group then proceeds to the calculation of weights for each scenario, which represent the probability of occurrence for each of these scenarios. These weights are applied on the sets of the parameters in order to produce a single scenario weighted risk parameter value which is subsequently used in both SICR assessment and ECL measurement. ECL calculation incorporates forwardlooking macroeconomic variables, including GDP growth rates, house price indices, unemployment rates, interest rates, etc.

Modified Financial Assets

In cases where the contractual cash flows of a financial asset have been modified and the modification is considered substantial enough, the original financial asset is then derecognized. The Group records the modified asset as a 'new' financial asset and the difference with the net carrying amount of the existing one is recorded in the income statement as derecognition gain or loss. Consequently, the modification date is considered to be the date of initial recognition for impairment calculation purposes, including for the purposes of determining whether a significant increase in credit risk has occurred.

Following derecognition, the modified asset is typically classified as Stage 1 for ECL measurement purposes. However, in some circumstances following a modification that results in derecognition of the original financial asset, there may be evidence that the new financial asset is credit-impaired at initial recognition, and thus, the financial asset is recognized as an originated creditimpaired financial asset (POCI).

In cases where the modification of the contractual cash flows is not considered substantial, the modification does not result in derecognition. The Group recalculates the gross carrying amount of the financial asset and recognizes the difference as a modification gain or loss, which is reflected in the income statement. In addition, the Group determines if the financial asset's credit risk has increased significantly since initial recognition by comparing the risk of a default occurring at initial recognition based on the original unmodified contractual terms and the risk of a default occurring at the reporting date, based on the modified contractual terms.

Presentation of allowance for credit loss

For debt instruments measured at amortized cost, credit impairment losses are recognized as a loss allowance reducing the gross carrying amount of the debt instruments in the balance sheet. For debt instruments measured at FVOCI, credit impairment losses are recognized in other comprehensive income and the accumulated amount does not reduce the carrying amount of the debt instruments in the balance sheet. For off-balance sheet financial instruments arising from lending activities, allowance for credit losses is presented in Other Liabilities.

The respective accounting policy applicable up to 31 December 2017 under IAS 39 regarding impairment of financial assets is included in note 2.2.12 of the consolidated financial statements for the year ended 31 December 2017.

2.3 IFRS 9 'Financial Instruments' – Impact of adoption

2.3.1 Adoption of IFRS 9

The Group adopted IFRS 9 in the first quarter of 2018, whereas the Standard's requirements were applied retrospectively by adjusting the Group's balance sheet on the date of transition on 1 January 2018. The Group applied the Standard's exemption not to restate comparative figures for prior periods; therefore the Group's 2017 comparatives are presented on an IAS 39 basis. The effect on the carrying amounts of financial assets and liabilities at the date of transition to IFRS 9 was recognized as an adjustment to opening reserves and retained earnings. The detailed effects of the adoption of IFRS 9 on 1 January 2018 are presented in note 2.3.2.

A Group-wide IFRS 9 Program, led jointly by Group Risk and Group Finance, was initiated in 2015 to ensure a robust and high quality implementation in compliance with the requirements of the Standard and respective regulatory guidance.

Overall governance is provided through a central Program Management Office (PMO) that coordinates the implementation of the Program among the various stakeholders and was responsible for the day-to-day management tasks, as well as two Management Committees, namely the Steering Committee and the Technical Committee. The Steering Committee, which comprises senior staff from all the main functions of the Group, is mandated to oversee the implementation in accordance with the Standard, monitor timeliness and the quality of the Program's deliverables, review program's results, approve deliverables and changes in the scope of

the program where appropriate, and regularly informs the Executive Board, the Board Risk Committee, the Audit Committee and the Board of Directors on the Program's implementation progress. The Technical Committee is composed of Subject Matter Experts responsible for evaluating key technical issues and analyzing proposed changes in accounting policies and risk management methodologies for the Steering Committee before they are submitted and approved by the competent bodies of the Bank.

Reflecting the scale and complexity of the implementation plan, the Program was structured with various project teams (Group Finance, Group Risk Management, Information Systems, Internal Audit, Lending Business Units, Troubled Assets Group, Operations, Global Markets & Treasury and International General Division) dedicated to the various elements associated with the implementation of the Standard. These teams were supported by two external consultancy firms.

The implementation for the Group's foreign subsidiaries is managed locally with the establishment of local PMOs and Steering Committees. Progress is monitored by the central PMO and the central Steering Committee in the Head Office, providing support and guidance to ensure consistent implementation within the Group.

The Group has committed to ensure a high quality implementation and ongoing application of IFRS 9 which ensures sound governance and internal control framework in the context of the IFRS 9 Program, taking also into consideration all existing frameworks related to risk management and corporate governance. Specifically, the PMO and Management are involved in the monitoring and oversight of the IFRS 9 application throughout the current financial year, which is the year of adoption. In addition the Group has performed further actions in order to ensure accuracy and robustness of ECL measurement, which involve the enhancement of the validation framework.

In addition, the Group is participating in the IFRS 9 thematic review conducted by the European Central Bank on the evaluation of the Group's preparedness, the impact of the new accounting principles on processes, infrastructure and regulatory capital. In this context, well-evidenced assurance activities have been carried out by external auditors on Group's IFRS 9 implementation policies as well as significant audit work performed by the Group's internal auditors.

The Group has formed the IFRS 9 accounting policies, key processes and process flows and the ECL methodologies, while further refinements will continue during 2018. Educational workshops to the involved stakeholders are conducted on an ongoing basis on the impact of IFRS 9 to the Group's lending practices and day-to-day operational activities in order to ensure that the new requirements are well understood and will be applied consistently across the Group.

The Group is currently considering the impacts of IFRS 9 to its day to day operations and overall business strategy in order to adapt successfully to the changes driven by the shift to the ECL model.

2.3.2 Transition to IFRS 9 – Estimated impact

The estimated impact of transitioning to IFRS 9, before tax, amounts to € 1,090 million as depicted in the table below and it is mainly attributed to the estimated impact on the Greek lending portfolio which amounts to € 949 million. The transition to IFRS 9 results in a decrease of the Group's total shareholders' equity by € 1,085 million, which is recognised as an opening balance adjustment at 1 January 2018.

	IFRS 9 impact
Impact attributed to :	€ million
Impairment
- Loans and advances to customers	(1,022)
- Other financial assets	(64)
Total impairment	(1,086)
Classification & Measurement	(4)
Hedging	-
Total IFRS 9 impact	(1,090)
Deferred Tax	5
Total IFRS 9 impact, net of tax	(1,085)

Following Management's assessment on current conditions, the Group has not recognized a deferred tax asset (DTA) on the IFRS 9 transition impact as at 1 January 2018. The unrecognised DTA amounts to € 300 million approximately arising from the IFRS 9 impact of the Bank and its Greek subsidiaries.

All the assumptions, accounting policies and calculation techniques used by the Group for the estimation of the IFRS 9 transition impact will continue to be subject to reviews and refinements and therefore the estimated impact may change until the Group finalizes its financial statements for the year ending 31 December 2018.

(i) Re-classification and re-measurement of carrying amounts upon IFRS 9 transition

The table below discloses the changes in the carrying amounts and the classifications of financial assets and financial liabilities upon transition to IFRS 9 as of 1 January 2018.

		IAS 39		Remeasurement			IFRS 9
	Category	Amount	Reclassification	ECL	Other	Amount	Category
Financial Assets	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Cash and balances with	Loans and
central banks	receivables						Amortised cost
Closing balance 31.12.2017		1,524
Remeasurement				(0)
Opening balance 1.1.2018		1,524		(0)		1,524
Due from	Loans and
credit institutions	receivables						Amortised cost
Closing balance 31.12.2017		2,123
Remeasurement				(1)
Opening balance 1.1.2018		2,123		(1)		2,122
Loans and advances to
customers measured at	Loans and
amortised cost	receivables						Amortised cost
Closing balance 31.12.2017		37,108
Reclassifications to			(71)				FVTPL (mandatory)
Remeasurement				(1,022)
Opening balance 1.1.2018		37,108	(71)	(1,022)		36,015
Loans and advances to
customers measured at
FVTPL							FVTPL (mandatory)
Reclassifications	Loans and
from	receivables		71
Remeasurement					(6)
Opening balance 1.1.2018			71		(6)	65
Total loans and advances
to customers		37,108	-	(1,022)	(6)	36,080
Debt securities lending	Loans and
portfolio	receivables
Closing balance 31.12.2017		1,654
Reclassifications to			(1,043)				Amortised cost
			(511)				FVOCI
			(100)				FVTPL (mandatory)
Opening balance 1.1.2018		1,654	(1,654)			-
Held-to-maturity portfolio	Held-to-maturity
Closing balance 31.12.2017		442
Reclassifications to			(294)				Amortised cost
			(148)				FVOCI
Opening balance 1.1.2018		442	(442)			-
Debt securities measured
at amortised cost							Amortised cost
Reclassifications from/	Loans and
Remeasurements	receivables		1,043	(55)	5
	Held-to-maturity		294	(1)
	AFS		113	(0)
Opening balance 1.1.2018			1,450	(57)	5	1,399

Selected Explanatory Notes to the Condensed Consolidated Interim Financial Statements

	IAS 39			Remeasurement			IFRS 9
	Category	Amount	Reclassification	ECL	Other	Amount	Category
Financial Assets	€ million	€ million	€ million	€ million	€ million	€ million	€ million
AFS portfolio	Available for sale
Closing balance 31.12.2017		5,509
Reclassifications to			(113)				Amortised cost
			(5,309)				FVOCI - Debt
			(1)				FVTPL - Debt
			(86)				FVTPL - Equity
Opening balance 1.1.2018		5,509	(5,509)			-
Debt securities measured
at FVOCI							FVOCI
Reclassifications from/
Remeasurements	AFS		5,309
	Loans and
	receivables		511		3
	Held-to-maturity		148		(5)
Opening balance 1.1.2018			5,968		(2)	5,966
Investment securities
mandatorily at FVTPL							FVTPL (mandatory)
Reclassifications from/	Loans and
Remeasurements	receivables		100		(1)
	AFS - Debt		1
	AFS - Equity		86
Opening balance 1.1.2018			187		(1)	186
Investment in equity
securities at FVOCI
Reclassifications from	AFS		-			-	FVOCI
Opening balance 1.1.2018			-			-
Total investment securities		7,605	-	(57)	2	7,551
Securities held for trading	FVTPL						FVTPL
Closing balance 31.12.2017		49
Opening balance 1.1.2018		49				49
Derivative financial
instruments (assets)	FVTPL						FVTPL
Closing balance 31.12.2017		1,878
Remeasurement					0
Opening balance 1.1.2018		1,878			0	1,878
	Loans and
Other Assets	receivables						Amortised cost
Closing balance 31.12.2017		1,724
Remeasurement				(6)
Opening balance 1.1.2018		1,724		(6)		1,718

Selected Explanatory Notes to the Condensed Consolidated Interim Financial Statements

	IAS 39			Remeasurement			IFRS 9
	Category	Amount	Reclassification	ECL	Other	Amount	Category
Financial Liabilities	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Due to central banks	Amortised cost						Amortised cost
Closing balance 31.12.2017		9,994
Opening balance 1.1.2018		9,994				9,994
Due to credit institutions	Amortised cost						Amortised cost
Closing balance 31.12.2017		3,997
Opening balance 1.1.2018		3,997				3,997
Due to customers
measured at FVTPL	FVTPL (designated)
Closing balance 31.12.2017		2
Reclassifications to			(2)				Amortised cost
Opening balance 1.1.2018		2	(2)			-
Due to customers
measured
at amortised cost	Amortised cost						Amortised cost
Closing balance 31.12.2017		33,841
Reclassifications from	FVTPL		2
Remeasurement					(0)
Opening balance 1.1.2018		33,841	2		(0)	33,843
Total due to customers		33,843	-		(0)	33,843
Debt securities in issue
measured at FVPL	FVTPL (designated)
Closing balance 31.12.2017		3
Reclassifications to			(3)				Amortised cost
Opening balance 1.1.2018		3	(3)			-
Debt securities in issue
measured
at amortised cost	Amortised cost						Amortised cost
Closing balance 31.12.2017		546
Reclassifications from			3
Remeasurement	FVTPL				0
Opening balance 1.1.2018		546	3		0	549
Total debt securities in issue		549	-		0	549
Derivative financial
instruments (liabilities)	FVTPL						FVTPL
Closing balance 31.12.2017		1,853
Remeasurement					0
Opening balance 1.1.2018		1,853			0	1,853
Deferred income tax
assets/ (liabilities)
Closing balance 31.12.2017		4,855
Remeasurement					5
Opening balance 1.1.2018		4,855			5	4,860
Total IFRS 9 Impact				(1,086)	1

As a result of the transition to IFRS 9, the most significant changes in classification and measurement of the financial assets and liabilities of the Group are as follows:

• Loans and advances to banks and customers measured at amortized cost under IAS 39, are also measured at amortized cost under IFRS 9, except for a non-significant amount (0.2%) of loans and advances to customers of € 71 million, which has been reclassified to FVTPL (mandatorily).

• The majority of debt securities of carrying amount € 5,309 million (out of a total amount of AFS investment securities of € 5,509 million) and previously classified as available-for-sale under IAS 39, is measured at FVOCI under IFRS 9.
• Held-to-maturity investment securities of € 442 million and debt securities lending portfolio of € 1,554 million measured at amortized cost under IAS 39, are measured at amortized cost or FVOCI under IFRS 9 depending on the business model within which they are held.
• Limited cases of debt securities of carrying amount € 101 million failed the SPPI test and therefore, are measured at FVTPL under IFRS 9.
• Equity securities of carrying amount € 86 million classified as available-for-sale under IAS 39 are measured at FVTPL under IFRS 9.
• Trading and derivative assets of € 49 million and € 1,878 million respectively measured at FVTPL under IAS 39, are also measured at FVTPL under IFRS 9.
• Financial liabilities that are designated at FVTPL under IAS 39 (structured notes, structured deposits) are measured at amortized cost, while embedded derivatives are separated from the host contracts where appropriate. The Bank has revoked the designation as permitted by IFRS 9 and the embedded derivatives are fully hedged economically with offsetting positions in standalone derivative instruments.

The table below presents the impact of transition to IFRS 9 to Fair value reserve and Retained earnings:

	IFRS 9 impact
	€ million
Special reserves
Closing balance under IAS 39	8,005
of which AFS reserve	282
Remeasurement under IFRS 9 measurement categories	4
Remeasurement under IFRS 9 ECL impairment for FVOCI portfolio	14
Deferred tax	(4)
Remeasurement under IFRS 9 for discontinued operations (net of tax)	(5)
Opening balance under IFRS 9	8,014
Retained earnings
Closing balance under IAS 39	(10,561)
Remeasurement under IFRS 9 measurement categories	(8)
Remeasurement under IFRS 9 ECL impairment including FVOCI portfolio	(1,100)
Deferred tax	9
Remeasurement under IFRS 9 for discontinued operations (net of tax)	5
Opening balance under IFRS 9	(11,655)

The following table reconciles the prior period's closing impairment allowance for Loans and advances to customers and Debt Securities measured in accordance with the IAS 39 incurred loss model and the provisions for credit related commitments in accordance with IAS 37 to the new impairment allowance measured in accordance with the IFRS 9 expected loss model at 1 January 2018. The impairment allowance for credit related commitments is included in the table below in the impairment allowance of loans and advances to customers at amortised cost.

	31 December 2017	as at 1 January 2018
	as per IAS 39/IAS 37	as per IFRS 9
		Remeasurement
			Lifetime ECL	Lifetime ECL
	Provision for		not credit	credit	Loss Allowance
	impairment	12-month ECL	impaired	impaired	under IFRS 9
	€ million	€ million	€ million	€ million	€ million
Loans and advances to customers at amortised cost	10,085	(23)	469	576	11,107
Debt securities at amortised cost	-	4	53	-	57
Debt securities at FVOCI	-	13	1	-	14
Total	10,085	(6)	523	576	11,178

Additional loss allowance of € 1,093 million is recognized as a result of the transition to IFRS 9 for the said instruments. The loss allowance relating to credit losses of debt securities at FVOCI (€ 14 million) is recognized in other comprehensive income and does not reduce the carrying amount of the debt securities in the balance sheet.

(ii) Regulatory capital

The Group's estimated capital impact from the initial application of IFRS 9 as shown in the table below:

	As at
Capital impact from the initial			1 January 2018
application of IFRS 9	31 December 2017	1 January 2018	IFRS 9 transitional
	IAS 39	IFRS 9 full impact	arrangements
	€ million	€ million	€ million
Common equity Tier 1 Capital	6,887	5,731	6,757
Risk weighted assets	38,387	37,864	38,097
	%	%	%
Common equity Tier 1 (CET 1) Ratio	17.9	15.1	17.7

The Group's estimated capital impact on the pro-forma fully loaded CET1 ratio as at 1 January 2018, based on the full implementation of the Basel III rules in 2024, considering the completion of the disposal of the Romanian subsidiaries classified as held for sale (refer to note 12) is shown in the table below:

	1 January 2018
Pro-forma with the completion of the		Post IFRS 9
disposal of the Romanian subsidiaries	Pro-forma fully	pro-forma fully	IFRS 9
	loaded	loaded	Impact
	€ million	€ million	€ million
Common equity Tier 1 Capital	5,691	4,536	(1,155)
Risk weighted assets	37,161	36,638	(523)
	%	%	%
Common equity Tier 1 (CET 1) Ratio	15.3	12.4	(2.9)

The Group has elected to apply the phase-in approach as per EU legislation (Regulation EU 2017/2395) for mitigating the impact of IFRS 9 transition on the regulatory capital. The transition period is for five years, with the proportion of the impact to be included being 5% in 2018 and 15%, 30%, 50% and 75% in the subsequent four years. The full impact is expected as of 1 January 2023. As a consequence, CET1 ratio has been reduced approximately by 20 basis points on the first year of IFRS 9 adoption, corresponding to a reduction of € 130 million in regulatory capital by applying regulatory transitional arrangements.

3. Significant accounting estimates and judgments in applying accounting policies

In preparing these condensed consolidated interim financial statements, the significant estimates, judgments and assumptions made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the published consolidated annual financial statements for the year ended 31 December 2017, except for the significant accounting judgments that relate to the changes in accounting policies described in note 2, as a result of IFRS 9 transition and arise primarily from the new ECL requirements.

3.1 ECL measurement

The ECL measurement requires management to apply significant judgment, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in significant changes to the timing and amount of allowance for credit loss to be recognized.

Selected Explanatory Notes to the Condensed Consolidated Interim Financial Statements

The Group's ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and estimates include:

Determination of a significant increase of credit risk

IFRS 9 does not include a definition of what constitutes a significant increase in credit risk (SICR). An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering primarily the change in the risk of default occurring over the remaining life of the financial instrument. The Group assesses whether a SICR has occurred since initial recognition based on qualitative and quantitative reasonable and supportable forward-looking information that includes significant management judgment. More stringent criteria could significantly increase the number of instruments migrating to stage 2.

Determination of scenarios, scenario weights and macroeconomic factors

To achieve the objective of measuring ECL, the Group evaluates a range of possible outcomes in line with the requirements of IFRS 9 through the application of a minimum three macroeconomic scenarios i.e. baseline, adverse and optimistic, in a way that reflects an unbiased and probability weighted outcome. Each of the scenarios is based on management's assumptions around future economic conditions in the form of macroeconomic, market and other factors. Changes in the scenarios and weights, the corresponding set of macroeconomic variables and the assumptions made around those variables for the forecast horizon would have a significant effect on the ECL amount. The Group independently validates all models and underlying methodologies used in the ECL measurement through competent resources, who are independent of the model development process.

Development of ECL models, including the various formulas, choice of inputs and interdependencies

For the purposes of ECL measurement the Group performs the necessary model parameterization based on observed point-in-time data on a granularity of monthly intervals. The ECL calculations are based on input parameters, i.e. EAD, PDs, LGDs, CCFs, etc. incorporating management's view of the future. The Group also determines the links between macroeconomic scenarios and, economic inputs, such as unemployment levels and collateral values, and the effect on PDs, EADs and LGDs.

Furthermore, the PDs are unbiased rather than conservative and incorporate relevant forward looking information including macroeconomic scenarios. The forecasting risk parameters models incorporate a number of explanatory variables, such as GDP, unemployment etc. which are used as independent variables for optimum predictive capability. The models are based on logistic regressions and run under the different macroeconomic scenarios and relevant changes and shocks in the macro environment reflected accordingly in a non-linear manner.

Segmentation of financial assets when their ECL is assessed on a collective basis

The Bank segments its exposures on the basis of shared credit risk characteristics upon initial recognition for the purposes of both assessing significant increase in credit risk and measuring loan loss allowance on a collective basis. The different segments aim to capture differences in PDs and in the rates of recovery in the event of default. On subsequent periods, the Group re-evaluates the grouping of its exposures at least on an annual basis, in order to ensure that the groups remain homogeneous in terms of their response to the identified shared credit risk characteristics. Re-segmentation reflects management's perception in respect to the change of credit risk associated with the particular exposures compared to initial recognition.

The Group updates and reviews the reasonability and performs backtesting of the main assumptions used in its methodology assessment for SICR and ECL measurement, at least on an annual basis or earlier, based on facts and circumstances.

Modeling and Management overlays / adjustments

A number of complex models have been developed or modified to calculate ECL, while temporary management adjustments may be required to capture new developments and information available, which are not yet reflected in the ECL calculation through the risk models. Internal counterparty rating changes, new or revised models and data may significantly affect ECL. The models are governed by the Group's validation framework, which aim to ensure independent verification, and are approved by the Board Risk Committee (BRC).

Independent Validation Unit

The Bank, acknowledging the need in the context of the implementation of IFRS 9 to independently validate all models and underlying methodologies used in the ECL measurement including the application of expert judgment, has decided to delegate the validation of all models developed to competent resources, who are independent of the model development process. The results of the validation are reported directly to the Group Credit Risk Officer (GCRO) and communicated to Senior Management (Management Risk Committee and Board Risk Committee).

The ECL model involves the exercise of expert judgment and use of assumption – based estimates with regards to the derivation of credit risk parameters (EAD, PD, LGD), macroeconomic scenarios, SICR thresholds, and the application of expert judgment (individual assessment).

In that respect independent validation process of ECL model estimates and IFRS 9 methodologies is key in order to ensure that the credit risk assessment, measurement models and underlying methodologies are capable of generating accurate, consistent across the Group and IFRS 9 compliant classification & measurement and impairment results.

ECL model validation involves the application of policies and procedures which set out the accountability and reporting structure of ECL model validation process, internal standards for assessing and approving changes to models, and reporting of the outcome of the model validation.

The purpose of the independent validation unit is the establishment of quality and reliability standards on ECL model inputs including historical, current and forward looking data, ECL model design, the assessment of model output and performance, which identifies and proposes remedial actions such as model re – calibration or re - development.

Further information about the key assumptions and sources of estimation uncertainty are set out in notes 4, 11, 12, 23, 26 and 28.

4. Credit exposure to Greek sovereign debt

As at 31 March 2018, the carrying value of Greek sovereign major exposures is as follows:

	31 March	31 December
	2018	2017
	€ million	€ million
Treasury bills	473	1,044
Greek government bonds	2,820	2,530
Derivatives with the Greek state	1,045	1,181
Exposure relating with Greek sovereign risk financial guarantee	196	196
Loans guaranteed by the Greek state	113	117
Loans to Greek local authorities and public organizations	61	54
Other receivables	1	4
Total	4,709	5,126

For the period ended 31 March 2018, the credit risk valuation adjustment on derivatives with the Hellenic Republic has decreased by € 10 million, with a positive effect on the Group's net trading income, mainly as a result of the market movements observed in the Hellenic Republic credit default swaps.

In addition, the increase in the yields of the long term Greek government bonds (GGBs) as of 31 March 2018 relative to the yields at the end of the year, resulted in € 94 million losses from change in fair value of Group's GGBs measured at FVOCI, which have been recognized in the other comprehensive income.

The adequacy of the impairment allowance for loans and receivables either guaranteed by the Greek state or granted to public related entities was evaluated in the context of the Group's impairment policy. The Group monitors the developments for the Greek macroeconomic environment closely in order to adjust appropriately its estimates and judgments based on the latest available information (note 2.1).

Information on the fair values of the Group's financial instruments is provided in note 26.

5. Capital Management

The Group's capital adequacy position is presented in the following table:

	31 March	31 December
	2018	2017
	€ million	€ million
Total equity attributable to shareholders of the Bank	5,001	7,104
Add: Adjustment due to IFRS9 transitional arrangements	1,012	-
Add: Regulatory non controlling interests	0	0
Less: Other regulatory adjustments	(315)	(217)
Common Equity Tier 1 Capital	5,698	6,887
Add: Preferred securities	17	21
Less: Other regulatory adjustments	-	(21)
Total Tier 1 Capital	5,715	6,887
Tier 2 capital-subordinated debt	950	-
Add: Other regulatory adjustments	37	28
Total Regulatory Capital	6,702	6,915
Risk Weighted Assets	38,625	38,387
Ratios:	%	%
Common Equity Tier 1 (1)	14.8	17.9
Tier 1 (1)	14.8	17.9
Total Capital Adequacy Ratio (1)	17.4	18.0

(1) The pro-forma Common Equity Tier 1, Tier 1 and Total Capital Adequacy ratios as at 31 March 2018, with the completion of the disposal of the Romanian subsidiaries classified as held for sale (note 12) would be 15.1%, 15.2% and 17.8%, respectively.

Note: The Group's CET1 as at 31 March 2018, based on the full implementation of the Basel III rules in 2024 (fully loaded CET1), would be 11.7% (31 December 2017: 14.9%), while the respective pro-forma ratio with the completion of the disposal of the Romanian subsidiaries classified as held for sale (note 12) would be 12.0%.

The Group has sought to maintain an actively managed capital base to cover risks inherent in the business. The adequacy of the Group's capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision (BIS rules/ratios) and adopted by the European Union and the Bank of Greece in supervising the Bank. The capital adequacy framework, as in force, was incorporated in the European Union (EU) legislation through the Directive 2013/36/EU (known as CRD IV), along with the Regulation No 575/2013/EU (known as CRR). Directive 2013/36/EU was transposed into Greek legislation by Law 4261/2014. Supplementary to that, in the context of Internal Capital Adequacy Assessment Process (ICAAP), the Group considers a broader range of risk types and the Group's risk management capabilities. ICAAP aims ultimately to ensure that the Group has sufficient capital to cover all material risks that it is exposed to, over a three-year horizon.

Based on Council Regulation No 1024/2013, the European Central Bank (ECB) conducts annually a Supervisory Review and Evaluation Process (SREP) in order to define the prudential requirements of the institutions under its supervision. The key purpose of the SREP is to ensure that institutions have adequate arrangements, strategies, processes and mechanisms as well as capital and liquidity to ensure a sound management and coverage of their risks, to which they are or might be exposed, including those revealed by stress testing and risks the institution may pose to the financial system. According to the 2017 SREP decision, starting from 1 January 2018, the Bank is required to meet on a consolidated basis a Common Equity Tier 1 ratio of at least 9.375% and a Total Capital Adequacy Ratio of at least 12.875% (Overall Capital Requirements including the Capital Conservation Buffer).

European Banking Authority 2018 Stress Test

On 31 January 2018, the European Banking Authority (EBA) launched its 2018 EU-wide stress test and released the macroeconomic scenarios. The EBA coordinates the EU-wide stress test exercise in cooperation with the ECB and national authorities. The results of the stress test provide stakeholders and the public with information about the resilience of banks, notably their ability to absorb shocks and meet capital requirements under adverse macroeconomic conditions.

The EU-wide stress test is conducted according to the EBA's methodology, which was published in November 2017, templates and scenarios. The exercise is carried out on the basis of year-end 2017 figures as restated with the impact of the IFRS 9 adoption and assesses the resilience of EU banks under a common macroeconomic baseline scenario and a common macroeconomic adverse scenario, covering the period 2018-2020. The baseline scenario is in line with the December 2017 forecast published by the ECB, while the adverse scenario, which has been developed by the European Systemic Risk Board (ESRB) and the ECB in close cooperation with the EBA and the competent authorities, is designed to ensure an adequate level of severity across all EU countries. No pass-fail threshold has been included, as the results of the exercise are designed to serve as an input to the Supervisory Review and Evaluation Process (SREP).

Eurobank, along with the other three Greek systemic banks directly supervised by the ECB, underwent the same stress test (ST) under the EBA scenarios and methodology. The timetable for the Greek systemic banks was accelerated in order to complete the test before the end of the third European Stability Mechanism stability support program for Greece.

2018 Eurobank Stress Test Results

On 5 May 2018, the ECB announced the results of the ST for the four Greek systemic banks, including Eurobank. Based on feedback received by the Single Supervisory Mechanism (SSM), the ST outcome along with other factors that have been assessed by the Supervisory Board (SB) of the SSM, pointed to no capital shortfall and no capital plan needed for the Bank as a result of the exercise.

Under the adverse scenario, the Bank's total capital adequacy ratio (CAD), including the effect of Tier 2 securities, issued in January 2018, is 9.5%, and the Core Tier 1 Capital (CET1) ratio is 6.8%. These ratios would be ca. 40 bps higher, at 9.9% and 7.2% respectively, if the positive impact from the sale of the Romanian disposal group (completed in early April 2018) was taken into account. The capital depletion stood at € 3.4 bn (8.7 ppts, excluding the negative impact of 250 bps related to the phase-out of grandfathered preference shares). Under the baseline scenario, the Bank is capital accretive, with CAD and CET1 ratios increasing at 19.3% and 16.6%, respectively. These ratios would be ca. 40 bps higher if the positive impact from the sale of the Romanian disposal group was included.

The Bank's performance in the ST confirms that it remains resilient to external shocks. The Bank's total capital and overall solid performance allows it to further streamline efforts on the implementation and delivery of its business priorities, focusing on effective management and rapid decrease of stock of non-performing exposures in line with its plans, as well as providing financing to its clients, to the Greek economy and the region. The above business priorities, along with additional initiatives associated with the restructuring, transformation or optimization of operations, in Greece and abroad will generate or release further capital and/or reduce risk weighted assets, contributing to the further strengthening of the Group's capital position.

Restructuring plan

On 29 April 2014, the European Commission (EC) approved the Bank's restructuring plan, as it was submitted through the Greek Ministry of Finance on 16 April 2014. In addition, on 26 November 2015, the EC approved the Bank's revised restructuring plan in the context of the recapitalization process in 2015. The Hellenic Republic has committed that the Bank will implement specific measures and actions and will achieve objectives, which are an integral part of the said restructuring plan.

The principal structural commitments of the revised restructuring plan relate to: (a) the reduction of the total costs and the maximum number of employees and branches for the Group's Greek activities, (b) the decrease of the cost of deposits collected in Greece, (c) the deleveraging of the portfolio of equity investments, subordinated and hybrid bonds, (d) the decrease in shareholding in specific non-banking subsidiaries, (e) the reduction of the net loans to deposits ratio for the Group's Greek banking activities, (f) the reduction of the portfolio of the Group's foreign assets (non–related to Greek clients), (g) restrictions on the capital injection to the Bank's foreign subsidiaries, the purchase of non-investment grade securities, the staff remuneration, the payment of dividends, the credit policy to be adopted and other strategic decisions.

By 31 March 2018, the Group has already met/ respected the commitments referring to items 'a' to 'd' and 'g', while the commitment referring to item 'f' has been respected since early April 2018 with the completion of the disposal of the Romanian subsidiaries classified as held for sale (note 12). In respect of the last commitment, referring to item 'e', the Group proceeds to all actions and initiatives required to meet it by 31 December 2018. On 31 March 2018, the net loans to deposits ratio for the Greek banking activities has been reduced to 117% (31 December 2017: 128%), slightly above the limit of 115% as provided in the revised restructuring plan.

Monitoring Trustee

The Memorandum of Economic and Financial Policies (MEFP) of the Second Adjustment Program for Greece between the Hellenic Republic, the European Commission, the International Monetary Fund and the European Central Bank provides for the appointment of a monitoring trustee in all banks under State Aid.

Grant Thornton S.A. was appointed as the Bank's Monitoring Trustee (MT) on 22 February 2013, with the mandate of the MT been subsequently amended and extended on 29 May 2014. The MT monitors the compliance with the commitments on corporate governance and commercial operational practices and the implementation of the restructuring plan and reports to the European Commission.

6. Segment information

Management has determined the operating segments based on the internal reports reviewed by the Strategic Planning Committee that are used to allocate resources and to assess their performance in order to make strategic decisions. The Strategic Planning Committee considers the business both from a business unit and geographic perspective. Geographically, management considers the performance of its business in Greece and other countries in Europe (International). Greece is further segregated into retail, corporate, wealth management, global and capital markets. International is monitored and reviewed on a country basis. The Group aggregates segments when they exhibit similar economic characteristics and profile and are expected to have similar long-term economic development.

The Group is organized in the following reportable segments:

• Retail: incorporating customer current accounts, savings, deposits and investment savings products, credit and debit cards, consumer loans, small business banking and mortgages.
• Corporate: incorporating current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products to corporate entities, custody, equity brokerage, cash management and trade services.
• Wealth Management: incorporating private banking services to medium and high net worth individuals, mutual fund and investment savings products, and institutional asset management.
• Global and Capital Markets: incorporating investment banking services including corporate finance, merger and acquisitions advice, financial instruments trading and institutional finance to corporate and institutional entities, as well as, specialized financial advice and intermediation to private and large retail individuals as well as small and large corporate entities.
• International: incorporating operations in Romania, Bulgaria, Serbia, Cyprus and Luxembourg.

Other operations of the Group comprise mainly investing activities, including property management and investment (Grivalia's operations are included until 30 June 2017, note 12).

The Group's management reporting is based on International Financial Reporting Standards (IFRS). The accounting policies of the Group's operating segments are the same with those described in the principal accounting policies.

Revenues from transactions between business segments are allocated on a mutually agreed basis at rates that approximate market prices.

Operating segments

	For the three months ended 31 March 2018
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management		Markets International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	144	85	2	51	81	(8)	355
Net commission income	10	20	7	4	20	0	61
Other net revenue	1	1	1	26	5	2	36
Total external revenue	155	106	10	81	106	(6)	452
Inter-segment revenue	3	4	1	(6)	(1)	(1)	-
Total revenue	158	110	11	75	105	(7)	452
Operating expenses	(117)	(28)	(6)	(18)	(48)	(2)	(219)
Impairment losses on loans
and advances to customers	(99)	(51)	(0)	-	(17)	-	(167)
Other impairment losses and provisions (note 10)	(1)	1	(0)	8	(2)	(8)	(2)
Share of results of associates and joint ventures	0	0	12	-	(0)	-	12
Profit/(loss) before tax from continuing operations before
restructuring costs	(59)	32	17	65	38	(17)	76
Restructuring costs (note 10)	(18)	(1)	(0)	(0)	-	(17)	(36)
Profit/(loss) before tax from continuing operations	(77)	31	17	65	38	(34)	40
Profit before tax from discontinued
operations	-	-	-	-	4	-	4
Non controlling interests	-	-	-	-	(0)	0	(0)
Profit/(loss) before tax attributable to shareholders	(77)	31	17	65	42	(34)	44

		31 March 2018
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management		Markets International	center (1)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets	21,712	12,622	253	9,464	13,506	955	58,512
Segment liabilities	25,174	6,338	1,617	6,615	12,074	1,648	53,466

The International segment is further analyzed as follows:

		For the three months ended 31 March 2018
	Romania	Bulgaria	Serbia	Cyprus	Luxembourg	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	3	38	15	20	5	81
Net commission income	(1)	10	3	6	2	20
Other net revenue	1	1	1	1	1	5
Total external revenue	3	49	19	27	8	106
Inter-segment revenue	(0)	0	0	(0)	(1)	(1)
Total revenue	3	49	19	27	7	105
Operating expenses	(1)	(22)	(12)	(9)	(4)	(48)
Impairment losses on loans and advances to customers	(3)	(10)	(2)	(2)	-	(17)
Other impairment losses and provisions	(1)	(2)	(0)	1	(0)	(2)
Share of results of associates and joint ventures	(0)	-	(0)	-	-	(0)
Profit/(loss) before tax from continuing operations	(2)	15	5	17	3	38
Profit before tax from discontinued operations	4	-	-	-	-	4
Non controlling interests	(0)	(0)	(0)	-	-	(0)
Profit before tax attributable to shareholders	2	15	5	17	3	42

		31 March 2018
Romania	Bulgaria	Serbia	Cyprus		Luxembourg International
€ million	€ million	€ million	€ million	€ million	€ million
2,502	3,678	1,381	4,924	1,301	13,506
2,559	3,227	997	4,483	1,090	12,074

As at 31 March 2018, an amount of € 2,008 million relating to the assets of the Romanian subsidiaries Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A. has been classified as held for sale (note 12).

				For the three months ended 31 March 2017
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	128	88	2	54	84	1	357
Net commission income	12	18	7	4	20	1	62
Other net revenue	1	6	(0)	24	1	8	40
Total external revenue	141	112	9	82	105	10	459
Inter-segment revenue	3	5	(0)	(7)	(1)	(0)	-
Total revenue	144	117	9	75	104	10	459
Operating expenses	(122)	(29)	(6)	(19)	(45)	(1)	(222)
Impairment losses on loans and advances to
customers	(115)	(46)	0	-	(23)	-	(184)
Other impairment losses and provisions (note 10)	-	0	(0)	-	(4)	2	(2)
Share of results of associates and joint ventures	-	(0)	1	-	(0)	(0)	1
Profit/(loss) before tax from continuing operations before
restructuring costs	(93)	42	4	56	32	11	52
Restructuring costs (note 10)	(2)	(1)	(0)	(0)	(0)	2	(1)
Profit/(loss) before tax from continuing
operations	(95)	41	4	56	32	13	51
Profit before tax from discontinued operations	-	-	-	-	1	10	11
Non controlling interests	-	-	-	-	(1)	(7)	(8)
Profit/(loss) before tax attributable to
shareholders	(95)	41	4	56	32	16	54
				31 December 2017
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management	Markets	International	center (1)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets	22,716	12,686	259	9,598	13,591	1,179	60,029

Segment liabilities	25,789	6,614	1,563	5,943	12,058	912	52,879

	For the three months ended 31 March 2017
	Romania	Bulgaria	Serbia	Cyprus	Luxembourg	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	3	39	14	22	6	84
Net commission income	1	9	3	5	2	20
Other net revenue	0	1	0	0	0	1
Total external revenue	4	49	17	27	8	105
Inter-segment revenue	(1)	(0)	(0)	(0)	(0)	(1)
Total revenue	3	49	17	27	8	104
Operating expenses	(1)	(21)	(11)	(8)	(4)	(45)
Impairment losses on loans and advances to customers	(1)	(16)	(3)	(3)	(0)	(23)
Other impairment losses and provisions	(0)	(1)	(0)	0	(3)	(4)
Share of results of associates and joint ventures	(0)	-	(0)	-	-	(0)
Profit before tax from continuing operations before
restructuring costs	1	11	3	16	1	32
Restructuring costs	-	-	-	-	(0)	(0)
Profit before tax from continuing operations	1	11	3	16	1	32
Profit before tax from discontinued operations	1	-	0	-	-	1
Non controlling interests	(1)	(0)	(0)	-	-	(1)
Profit before tax attributable to shareholders	1	11	3	16	1	32

	31 December 2017
	Romania	Bulgaria Serbia Cyprus Luxembourg				International
	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets(2)	2,705	3,649	1,353	4,890	1,301	13,591
Segment liabilities(2)	2,699	3,162	954	4,459	1,092	12,058

(1) Interbank eliminations between International and the other Group's segments are included.

(2) Intercompany balances among the Countries have been excluded from the reported assets and liabilities of International segment.

7. Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding the average number of ordinary shares purchased by the Group and held as treasury shares.

The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. The Group has issued convertible, subject to certain conditions preferred securities (Series D, note 25). Until 31 December 2017, the potential ordinary shares which could result from the conversion of the aforementioned preferred securities were not deemed to be issuable on the basis of the restrictions in force relevant to the restructuring plan (note 5). Accordingly, the Series D of preferred securities was not included in the calculation of diluted earnings per share. As of 1 January 2018, the above restrictions have been lifted.

As at 31 March 2018, the Series D of preferred securities was not included in the calculation of diluted earnings per share as its effect would have been anti-dilutive.

		Three months ended 31 March
		2018	2017
Net profit for the period attributable to ordinary shareholders (after deducting dividend attributable to preferred securities holders, note 25) Net profit for the period from continuing operations	€ million	34	37
attributable to ordinary shareholders (after deducting dividend attributable to preferred securities holders, note 25)	€ million	31	33
Weighted average number of ordinary shares in issue for basic and diluted earnings per share	Number of shares 2,182,877,869		2,183,500,574
Earnings per share - Basic and diluted earnings per share	€	0.02	0.02
Earnings per share from continuing operations
- Basic and diluted earnings per share	€	0.01	0.02

Basic and diluted earnings per share from discontinued operations for the period ended 31 March 2018 amounted to € 0.001 (31 March 2017: € 0.001 basic earnings per share).

8. Operating expenses

	31 March	31 March
	2018	2017
	€ million	€ million
Staff costs	(123)	(126)
Administrative expenses	(49)	(49)
Contributions to resolution and deposit guarantee funds	(17)	(18)
Depreciation of property, plant and equipment	(9)	(9)
Amortisation of intangible assets	(7)	(6)
Operating lease rentals	(14)	(14)
Total from continuing operations	(219)	(222)

The average number of employees of the Group's continuing operations during the period was 13,367 (31 March 2017: 13,806). As at 31 March 2018, the number of branches and business/private banking centers of the Group's continuing operations amounted to 659.

Furthermore, the average number of employees of the Romanian disposal group during the period was 1,973 (31 March 2017: 2,128 employees for the Romanian disposal group and Grivalia subgroup). As at 31 March 2018, the number of branches and business centers of the Romanian disposal group amounted to 155 (note 12).

Selected Explanatory Notes to the Condensed Consolidated Interim Financial Statements

9. Impairment allowance for loans and advances to customers

The table below presents the movement of the impairment allowance on loans and advances to customers (expected credit loss – ECL) for the period ended 31 March 2018:

	31 March 2018
	12-month ECL	Lifetime ECL not credit-impaired loans	Lifetime ECL credit-impaired loans (1)	Total
	€ million	€ million	€ million	€ million
Impairment allowance as at 1 January 2018	160	810	10,137	11,107
Transfer of ECL allowance (2)	(13)	(5)	(44)	(62)
Transfers between stages	30	16	(46)	-
Impairment loss for the period	(28)	(23)	219	168
Recoveries from written - off loans	-	-	4	4
Amounts written off	-	-	(168)	(168)
Unwinding of Discount	-	-	(76)	(76)
Foreign exchange and other movements	(2)	1	(20)	(21)
Impairment allowance as at 31 March 2018	147	799	10,006	10,952

(1) As at 31 March 2018 includes impairment allowance for POCI loans of € 1 million (1 January 2018: € 1 million).

(2) As of 1 January 2018, the impairment allowance for credit related commitments (off balance sheet items) is monitored separately from the impairment allowance on loans and advances to customers and accordingly is presented within other liabilities (note 23).

The impairment losses on loans and advances to customers recognized in the income statement for the period ended 31 March 2018 amounted to € 167 million, including reversal of impairment allowance for credit related commitments of € 1 million.

10. Other impairments, restructuring costs and provisions

	31 March	31 March
	2018	2017
	€ million	€ million
Impairment losses and valuation losses on
investment and repossessed properties	(9)	(1)
Impairment losses/ reversal on bonds (note 14)	9	(0)
Other impairment losses and provisions (1)	(2)	(1)
Other impairment losses and provisions	(2)	(2)
Provision for the Voluntary Exit Schemes (note 23)	(36)	-
Other restructuring costs	(0)	(1)
Restructuring costs	(36)	(1)
Total from continuing operations	(38)	(3)

(1) Includes impairment losses on other assets and provisions on litigations and other operational risk events.

11. Income tax

	31 March	31 March
	2018	2017
	€ million	€ million
Current tax	(9)	(15)
Deferred tax	1	(3)
Total tax (charge)/income from continuing operations	(8)	(18)

According to Law 4172/2013 currently in force, the nominal Greek corporate tax rate is 29%. In addition, dividends distributed, other than intragroup dividends which under certain preconditions are relieved from both income and withholding tax, are subject to 15% withholding tax, according to Law 4387/2016 and Law 4389/2016 which increased the respective tax rate from 10% to 15% for dividend distributions as of 1 January 2017 and onwards. According to article 14 of Law 4472/2017, which amended Law 4172/2013, the Greek corporate tax rate for entities other than credit institutions, will decrease from 29% to 26% for the tax years starting from 1 January 2019 and onwards, subject to certain preconditions in the context of the Third Economic Adjustment Program of Greece.

Tax certificate and open tax years

For the year ended 31 December 2011 and onwards as the Law 4174/2013 (article 65A) currently stands (and as Law 2238/1994 previously provided in article 82), up to and including fiscal years starting before 1 January 2016, the Greek sociétés anonymes and limited liability companies whose annual financial statements are audited compulsorily, were required to obtain an 'Annual Tax Certificate', which is issued after a tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. For fiscal years starting from 1 January 2016 and onwards, the 'Annual Tax Certificate' is optional, however, as a general rule the Group's Greek companies will continue to obtain such certificate.

The Bank has been audited by tax authorities up to 2010 (included). Furthermore, the Bank has obtained by external auditors unqualified tax certificates for years 2011-2016, while the tax audit from external auditors is in progress for 2017. In addition, New TT Hellenic Postbank and New Proton Bank, which were merged with the Bank in 2013, have obtained by external auditors unqualified tax certificates with a matter of emphasis for their unaudited by tax authorities periods/tax years 18/1-30/6/2013 and 9/10/2011- 31/12/2012, respectively, with regards to potential tax obligations resulting from their carve out. For both cases the Bank has formed adequate provisions.

The Group's subsidiaries, associates and joint ventures which operate in Greece (notes 15 and 16) have in principle 3 to 6 open tax years. For these entities that are subject to statutory audit by external auditors and obtain the 'Annual Tax Certificate', the said certificate is unqualified for years 2012-2016. The tax audit from external auditors is in progress for 2017.

In accordance with the Greek tax legislation and the respective Ministerial Decisions issued, additional taxes and penalties may be imposed by the Greek tax authorities following a tax audit within the applicable statute of limitations (i.e. in principle five years as from the end of the fiscal year within which the relevant tax return should have been submitted), irrespective of whether an unqualified tax certificate has been obtained from the tax paying company. In light of the above, as a general rule, the right of the Greek State to impose taxes up to tax year 2011 (included) has been time-barred for the Bank and the Group's Greek subsidiaries.

The open tax years of foreign Group's bank subsidiaries (continuing operations) are as follows: (a) Eurobank Cyprus Ltd, 2014-2017, (b) Eurobank Bulgaria A.D., 2013-2017, (c) Eurobank A.D. Beograd (Serbia), 2012-2017, and (d) Eurobank Private Bank Luxembourg S.A., 2013-2017. The remaining of the Group's foreign entities (notes 15 and 16), which operate in countries where a statutory tax audit is explicitly stipulated by law, have 1 to 6 open tax years in principle, subject to certain preconditions of the applicable tax legislation of each jurisdiction.

Selected Explanatory Notes to the Condensed Consolidated Interim Financial Statements

Deferred income taxes

Deferred income taxes are calculated on all deductible temporary differences under the liability method as well as for unused tax losses at the rate in effect at the time the reversal is expected to take place.

The movement on deferred income tax is as follows:

	31 March
	2018
	€ million
Balance at 1 January	4,855
IFRS 9 transition impact (note 2.3.2)	5
Income statement credit/(charge) from continuing operations	1
Investment securities at FVOCI	28
Cash flow hedges	(1)
Other	1
Balance at 31 March	4,889

Deferred income tax assets/ (liabilities) are attributable to the following items:

	31 March	31 December
	2018	2017
	€ million	€ million
PSI+ tax related losses	1,189	1,201
Loan impairment and accounting write-offs	3,017	3,011
Losses from disposals and crystallized write-offs of loans	245	239
Valuations through the income statement	305	311
Costs directly attributable to equity transactions	29	31
Unused tax losses	31	22
Cash flow hedges	16	17
Defined benefit obligations	13	14
Own used, investment and repossessed properties	(15)	(16)
Investment securities at FVOCI	(52)	-
Valuations directly to available-for-sale revaluation reserve	-	(84)
Other	111	109
Net deferred income tax	4,889	4,855

The net deferred income tax is analyzed as follows:

	31 March	31 December
	2018	2017
	€ million	€ million
Deferred income tax assets	4,891	4,859
Deferred income tax liabilities (note 23)	(2)	(4)
Net deferred income tax	4,889	4,855

Deferred income tax (charge)/credit from continuing operations is attributable to the following items:

	31 March	31 March
	2018	2017
	€ million	€ million
Loan impairment, disposals and write-offs	10	19
Unused tax losses	7	(1)
Tax deductible PSI+ losses	(13)	(13)
Change in fair value and other temporary differences	(3)	(8)
Deferred income tax (charge)/credit from continuing operations	1	(3)

As at 31 March 2018, the Group recognized net deferred tax assets amounting to € 4.9 bn as follows:

• (a) € 1,189 million refer to losses resulted from the Group's participation in PSI+ and the Greek's state debt buyback program which are subject to amortization (i.e. 1/30 of losses per year starting from year 2012 and onwards) for tax purposes;
• (b) € 3,017 million refer to deductible temporary differences arising from loan impairment that can be utilized in future periods with no specified time limit and according to current tax legislation of each jurisdiction and to accounting debt write-offs according to Law 4172/2013 as amended by Law 4465/2017 in March 2017;
• (c) € 245 million refer to the unamortized part of the crystallized tax loss arising from NPLs write-offs and disposals, which are subject to amortization (i.e. 1/20 of losses per year starting from year 2016 and onwards), according to Law 4172/2013 as amended by Law 4465/2017 in March 2017;
• (d) € 31 million refer to unused tax losses. The ability to utilize tax losses carried forward mainly expires in 2020;
• (e) € 29 million mainly refer to deductible temporary differences related to the (unamortized for tax purposes) costs directly attributable to Bank's share capital increases, subject to 10 years' amortization according to tax legislation in force at the year they have been incurred; and
• (f) € 378 million refer to other deductible temporary differences (i.e. valuation losses, provisions for pensions and other postretirement benefits, etc.) the majority of which can be utilized in future periods with no specified time limit and according to the applicable tax legislation of each jurisdiction.

Assessment of the recoverability of deferred tax assets

The recognition of the above presented deferred tax assets is based on management's assessment, as at 31 March 2018, that the Group's legal entities will have sufficient future taxable profits, against which the unused tax losses, the deductible temporary differences, as well as the losses from PSI+ and the Greek state's debt buyback program can be utilized. The deferred tax assets are determined on the basis of the tax treatment of each deferred tax asset category, as provided by the applicable tax legislation of each jurisdiction, the eligibility of carried forward losses for offsetting with future taxable profits, the actual tax results for the year ended 31 December 2017 and the extrapolated tax results for the year ended 31 December 2018 using the actual tax results for the period ended 31 March 2018. Additionally, the Group's assessment on the recoverability of recognized deferred tax assets is based on (a) the future performance expectations (projections of operating results) and growth opportunities relevant for determining the expected future taxable profits, (b) the expected timing of reversal of the deductible and taxable temporary differences, (c) the probability that the Group entities will have sufficient taxable profits in the future, in the same period as the reversal of the deductible and taxable temporary differences (i.e. profits/ losses on sale of investments or other assets, etc.) or in the years into which the tax losses can be carried forward, and (d) the historical levels of Group entities' performance in combination with the previous years' tax losses caused by one off or non-recurring events.

For the period ended 31 March 2018 the Group has conducted a deferred tax asset (DTA) recoverability assessment based on its three-year Business Plan that was approved by the Board of Directors in January 2018 and provides outlook of its profitability and capital position for the period up to the end of 2020. The said Business Plan has also been submitted to the Hellenic Financial Stability Fund (HFSF) and to the Single Supervisory Mechanism (SSM).

For the years beyond 2020, the forecast of operating results was based on the management projections considering the growth opportunities of the Greek economy, the banking sector and the Group itself.

The level of the abovementioned projections adopted in the Group's Business Plan is mainly based on assumptions and estimates regarding (a) the further reduction of its funding cost driven by the gradual elimination of the Emergency Liquidity Assistance (ELA), the gradual repatriation of customer deposits replacing more expensive funding sources, and the further decrease of the respective interest rates, (b) the lower loan impairment losses as a result of the macroeconomic conditions in Greece that are expected to improve gradually and the strategic initiatives in line with the Non-Performing Exposures (NPEs) strategy that the Group has committed to the SSM, regarding the effective management of its troubled assets' portfolio, (c) the effectiveness of the continuous cost containment initiatives, and (d) the gradual restoration of traditional commission income, such as asset management and network fees and commissions relating with capital markets and investment banking activities.

The implementation of the abovementioned Business Plan largely depends on the risks and uncertainties that stem from the macroeconomic environment in Greece as well as in the countries that the Group operates (note 2.1).

Deferred tax credit against the Greek State and tax regime for loan losses

As at 31 March 2018, pursuant to the Law 4172/2013, as in force, the Bank's eligible DTAs/deferred tax credits (DTCs) against the Greek State amounted to € 3,972 million. The said DTCs will be converted into directly enforceable claims (tax credit) against the Greek State provided that the Bank's after tax accounting result for the year is a loss. In particular, DTCs are accounted for on: (a) the losses from the Private Sector Involvement (PSI) and the Greek State Debt Buyback Program and (b) on the sum of (i) the unamortized part of the crystallized loan losses from write-offs and disposals, (ii) the accounting debt write-offs and (iii) the remaining accumulated provisions and other losses in general due to credit risk recorded up to 30 June 2015.

In accordance with the tax regime, in force, the above crystallized tax losses arising from write-offs and disposals on customers' loans are amortised over a twenty-year period, maintaining the DTC status during all this period, while they are disconnected from the accounting write-offs. Accordingly, the recovery of the Bank's deferred tax asset recorded on loans and advances to customers and the regulatory capital structure are safeguarded, contributing substantially to the achievement of the NPEs reduction targets, through the acceleration of write-offs and disposals.

As of May 2017, according to article 82 of Law 4472/2017, which further amended article 27A of Law 4172/2013, an annual fee of 1.5% is imposed on the excess amount of deferred tax assets guaranteed by the Greek State, stemming from the difference between the current tax rate (i.e. 29%) and the tax rate applicable on 30 June 2015 (i.e. 26%). For the period ended 31 March 2018, an amount of € 2 million has been recognized in "Other income/(expenses)".

12. Discontinued operations

Romanian subsidiaries classified as held for sale

On 15 September 2017, the Bank announced that it has entered into negotiations with Banca Transilvania (BT) with regards to the sale of Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A. in Romania (Romanian disposal group). The sale was considered highly probable, therefore, as of 30 September 2017 Romanian disposal group was classified as held for sale. On 24 November 2017, the Bank announced that it has reached an agreement with BT with regards to the above sale. For the period ended 31 March 2018, the Romanian disposal group is part of the Group's operations in Romania, which are presented in the International segment.

Following the classification of the disposal group as held for sale, in accordance with IFRS 5, the Group has measured it at the lower of its carrying amount and fair value less costs to sell. The fair value less estimated costs to sell of the Romanian disposal group has been determined based on the terms of the aforementioned agreement with BT. This is a non-recurring fair value measurement, categorized as Level 3 in the fair value hierarchy due to the significance of the unobservable inputs. Accordingly, an accumulated remeasurement loss of € 78 million has been recognized on 31 March 2018 (31 December 2017: € 90 million), after taking into account the impact of € 12 million loss from adopting IFRS 9 as of 1 January 2018.

The results of the Romanian disposal group are set out below:

	Three months ended 31 March
	2018	2017
	€ million	€ million
Net interest income	24	25
Net banking fee and commission income	6	5
Gains less losses from investment securities	0	2
Operating expenses	(22)	(22)
Profit before impairments, remeasurement losses and
provisions from discontinued operations	8	10
Impairment losses on loans and advances	(3)	(4)
Other impairment losses and provisions	(1)	(5)
Profit before tax from discontinued operations	4	1
Income tax	(1)	1
Profit after tax from discontinued operations	3	2
Net profit from discontinued operations
attributable to non controlling interests	0	0
Net profit from discontinued operations
attributable to shareholders	3	2

The major classes of assets and liabilities of Romanian subgroup classified as held for sale are as follows:

	31 March	31 December
	2018	2017
	€ million	€ million
Loans and advances to customers	1,251	1,254
Investment securities	328	328
Cash and balances with central banks	224	333
Due from credit institutions	197	243
Securities held for trading	8	26
Total assets of disposal group classified as held for sale	2,008	2,184
Due to customers	1,768	1,831
Due to credit institutions	26	93
Other liabilities	33	35
Total liabilities of disposal group classified as held for sale	1,827	1,959
Net Intragroup assets associated with the Romanian disposal group	28	30
Net assets of disposal group classified as held for sale	209	255
Net assets of disposal group classified as held for sale
attributable to non controlling interests	2	2
Net assets of disposal group classified as held for sale
attributable to shareholders	207	253

As at 31 March 2018, cumulative losses (mainly currency translation differences) attributable to shareholders recognized in other comprehensive income amounted to € 46 million (31 December 2017: € 42 million).

Post balance sheet event

On 3 April 2018, Eurobank and Banca Transilvania (BT) concluded all the remaining actions and fulfilled all the conditions precedent for the completion of the transfer of the shares held by the Group in Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A. to BT. Prior to this, BT has obtained the relevant regulatory approvals both from the National Bank of Romania and the Romanian Competition Authority for the acquisition.

The consideration of the transaction, net of selling costs, is estimated at € 207 million, in addition to the € 25 million special dividend and € 50 million capital return received in 2017 and in the first quarter 2018, respectively. The said consideration is subject to adjustments following the finalization of the completion statements of Romanian disposal group and the fulfillment of certain conditionalities as per the aforementioned agreement with BT. Based on the above, the estimated effect of the transaction amounts to € 46 million loss, arising from the recyclement to the income statement of the cumulative losses previously recognized in other comprehensive income (mainly related to currency translation differences). The transaction is capital accretive and liquidity positive for the Group.

Grivalia subgroup

In June 2017, Grivalia subgroup (Grivalia Properties R.E.I.C. and its subsidiaries) was classified as a disposal group held for sale, as the sale of the Bank's entire holding of 20% in the share capital of Grivalia Properties R.E.I.C. was considered highly probable.

The held for sale operations of Grivalia subgroup included: a) Grivalia Properties R.E.I.C. and its subsidiaries in Greece and Luxembourg, which were presented in other operations segment, and b) Grivalia's subsidiaries in Romania and Serbia, which were presented in International segment.

For the period ended 31 March 2017, the net profit of the Grivalia subgroup amounted to € 7 million, of which € 2 million attributable to the shareholders, while the loss recognized in other comprehensive income (mainly currency translation differences) attributable to shareholders, amounted to € 0.03 million.

On 4 July 2017, the Bank announced the successful sale of its shareholding in Grivalia Properties R.E.I.C. Further information in relation to the disposal of Grivalia subgroup is provided in note 17 of the consolidated financial statements for the year ended 31 December 2017.

13. Loans and advances to customers

	As at
	31 March	1 January	31 December
	2018	2018	2017
	€ million	€ million	€ million
Loans and advances to customers at amortised cost
- Gross carrying amount	46,985	47,122	47,242
- Impairment allowance	(10,952)	(11,107)	(10,134)
Net Carrying Amount	36,033	36,015	37,108
Loans and advances to customers at FVTPL	61	65	-
Total	36,094	36,080	37,108

The table below presents the carrying amount of loans and advances to customers per business unit and per stage as at 31 March 2018:

					1 January	31 December
			31 March 2018		2018	2017
		Lifetime ECL not	Lifetime ECL	Total carrying	Total carrying	Total carrying
	12-month ECL	credit-impaired	credit-impaired (1)	amount	amount	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Loans and advances to
customers at amortised cost
Mortgage lending:
- Gross carrying amount	6,629	3,536	6,358	16,523	16,667	16,667
- Impairment allowance	(27)	(299)	(2,313)	(2,639)	(2,646)	(2,318)
Net Carrying Amount	6,602	3,237	4,045	13,884	14,021	14,349
Consumer lending:
- Gross carrying amount	2,131	399	2,654	5,184	5,251	5,251
- Impairment allowance	(35)	(118)	(2,152)	(2,305)	(2,294)	(2,076)
Net Carrying Amount	2,096	281	502	2,879	2,957	3,175
Small Business lending:
- Gross carrying amount	1,507	1,192	4,266	6,965	6,973	6,973
- Impairment allowance	(13)	(228)	(2,114)	(2,355)	(2,386)	(2,069)
Net Carrying Amount	1,494	964	2,152	4,610	4,587	4,904
Wholesale lending:
- Gross carrying amount	9,528	2,421	6,364	18,313	18,231	18,351
- Impairment allowance	(72)	(154)	(3,427)	(3,653)	(3,781)	(3,671)
Net Carrying Amount	9,456	2,267	2,937	14,660	14,450	14,680
Total loans and advances to
customers at AC
- Gross carrying amount	19,795	7,548	19,642	46,985	47,122	47,242
- Impairment allowance	(147)	(799)	(10,006)	(10,952)	(11,107)	(10,134)
Net Carrying Amount	19,648	6,749	9,636	36,033	36,015	37,108
Loans and advances to
customers at FVTPL
Net Carrying Amount				61	65	-
Total				36,094	36,080	37,108

(1) As at 31 March 2018 includes POCI loans of € 5 million gross carrying amount and € 1 million impairment allowance (1 January 2018: € 5 million gross carrying amount and € 1 million impairment allowance).

As at 31 March 2018, the Group's non performing exposures included in loans and advances to customers at amortised cost (continuing operations) amounted to € 19,642 million (1 January 2018: € 20,022 million).

Operational targets for Non-Performing Exposures (NPEs)

In line with the national strategy for the reduction of NPEs, the Bank of Greece (BoG), in cooperation with the supervisory arm of the European Central Bank (ECB), has designed an operational targets framework for NPEs management, supported by several key performance indicators. Pursuant to the said framework, the Greek banks submitted at the end of September 2016 a set of NPEs operational targets together with a detailed NPE management strategy with a 3-year time horizon, which were formed on the basis of key macroeconomic assumptions. In September 2017, the Greek banks submitted an updated set of NPEs operational targets, together with an updated NPEs management strategy, for the years 2017-2019.

In accordance with the latest relevant BoG report issued in March 2018, in the fourth quarter of 2017 the Greek banks managed in total to meet the targets for the reduction in the stock of NPEs. More specifically, at the end of December 2017, the stock of NPEs (excluding off-balance sheet items) amounted to € 94.4 bn or € 1.6 bn lower than the targeted amount. With respect to the target for the stock of NPLs (90 days past due loans), their balances stood at € 65.1 bn or approximately € 0.8 bn lower than the targeted amount. As at 31 March 2018, the Bank has reduced the stock of NPEs by € 2.5 bn since 31 March 2017 to € 17.8 bn outperforming the respective target submitted to SSM in September 2017 by € 0.3 bn.

14. Investment securities

		As at
	31 March	1 January	31 December
	2018	2018	2017
	€ million	€ million	€ million
Investment securities at FVOCI	5,488	5,966	-
Investment securities at amortised cost	1,416	1,399	-
Investment securities at FVTPL	93	186	-
Available-for-sale investment securities	-	-	5,509
Debt securities lending portfolio	-	-	1,654
Held-to-maturity investment securities	-	-	442
Total	6,997	7,551	7,605

Following the transition to IFRS 9, the Group reclassified debt securities from the 'Available-for-sale' portfolio to 'Investment securities' portfolio carried at amortized cost. As at 31 March 2018, the fair value of the reclassified securities was € 117 million. Had the financial assets not been reclassified, the change in fair value that would have been recognised in other comprehensive income for the period from the reclassification date until 31 March 2018 would have resulted in € 2 million gain net of tax.

The table below discloses the carrying amount and the exposure to credit risk of investment securities:

		31 March 2018
		Lifetime ECL	Lifetime ECL	Total
	12-month	not credit	credit	carrying
	ECL	impaired	impaired	amount
	€ million	€ million	€ million	€ million
Debt securities at amortised cost
- Gross carrying amount	922	542	-	1,464
- Impairment allowance	(2)	(46)	-	(48)
	920	496	-	1,416
	5,464	24	-	5,488
	6,384	520	-	6,904
Other investment securities (equity/debt)
				93
				6,997

During the period ended 31 March 2018, the impairment allowance of the investment securities of the Group decreased by € 9 million, mainly due to the improvement of the credit quality of the Hellenic Republic as depicted in the markets during the quarter relative to the respective period ended 31 December 2017.

The investment securities per category are analyzed as follows:

	31 March 2018
	Investment
Investment	securities at	Investment
securities at	amortised	securities at
FVOCI	cost	FVTPL	Total
€ million	€ million	€ million	€ million
1,908	897	-	2,805
472	-	-	472
2,399	519	-	2,918
709	-	5	714
5,488	1,416	5	6,909
-	-	88	88
5,488	1,416	93	6,997

(1) As at 31 March 2018, other government bonds include € 201 million notes issued by the EFSF.

	31 December 2017
	Available- Debt securities		Held-to-
	-for-sale	lending	-maturity
	securities	portfolio	securities	Total
	€ million	€ million	€ million	€ million
Debt securities
- EFSF bonds	203	362	-	565
- Greek government bonds	1,557	964	-	2,521
- Greek government treasury bills	1,044	-	-	1,044
- Other government bonds	2,200	298	294	2,792
- Other issuers	419	30	148	597
	5,423	1,654	442	7,519
Equity securities	86	-	-	86
Total	5,509	1,654	442	7,605

During the period ended 31 March 2018, the Group recognized € 24 million gains presented in line 'Gains less losses from investment securities', which mainly resulted from bonds' sale transactions.

In the comparative period, a total gain of € 14 million (continuing operations) was recognized, mainly as a result of bonds' and equities' sale transactions.

Sale of European Financial Stability Facility (EFSF) notes

In the context of the European Stability Mechanism (ESM)/EFSF decision for the implementation of the short-term Greek debt relief measures, the Bank had entered into an agreement with the EFSF, the Hellenic Republic, the HFSF and the Bank of Greece on 16 March 2017 for the exchange of the EFSF floating rate notes which had been used for the recapitalization of the Greek banking system for fixed rate ones, which would be sold back after a short holding period to EFSF.

In January 2018, the Bank concluded the sale of its entire position in EFSF notes, as the remaining fixed rate said bonds of face value of € 0.3 bn were sold back to the EFSF, with no effect in the Bank's income statement.

15. Shares in subsidiary undertakings

The following is a listing of the Bank's subsidiaries at 31 March 2018, included in the condensed consolidated interim financial statements for the period ended 31 March 2018:

		Percentage	Country of
Name	Note	holding	incorporation	Line of business
Be Business Exchanges S.A. of Business Exchanges		98.01	Greece	Business-to-business e-commerce, accounting
Networks and Accounting and Tax Services				and tax services
Eurobank Asset Management Mutual Fund Mngt		100.00	Greece	Mutual fund and asset management
Company S.A.
Eurobank Equities S.A.		100.00	Greece	Capital markets and advisory services
Eurobank Ergasias Leasing S.A.		100.00	Greece	Leasing
Eurobank Factors S.A.		100.00	Greece	Factoring
Eurobank FPS Loans and Credits Claim		100.00	Greece	Loans and Credits Claim Management
Management S.A.
Eurobank Household Lending Services S.A.	a	100.00	Greece	Promotion/management of household products
Eurobank Property Services S.A.		100.00	Greece	Real estate services
Hellenic Post Credit S.A.		50.00	Greece	Credit card management and other services
Herald Greece Real Estate development and		100.00	Greece	Real estate
services company 1
Herald Greece Real Estate development and		100.00	Greece	Real estate
services company 2
Standard Ktimatiki S.A.		100.00	Greece	Real estate
Modern Hoteling	b	100.00	Greece	Real estate
Eurobank Bulgaria A.D.		99.99	Bulgaria	Banking
Bulgarian Retail Services A.D.		100.00	Bulgaria	Rendering of financial services and credit card
				management
ERB Property Services Sofia A.D.	d	99.99	Bulgaria	Real estate services
ERB Leasing E.A.D.		100.00	Bulgaria	Leasing
IMO 03 E.A.D.		100.00	Bulgaria	Real estate services
IMO Central Office E.A.D.	e	99.99	Bulgaria	Real estate services
IMO Property Investments Sofia E.A.D.		100.00	Bulgaria	Real estate services
ERB Leasing Bulgaria EAD	f	100.00	Bulgaria	Leasing
ERB Hellas (Cayman Islands) Ltd		100.00	Cayman Islands	Special purpose financing vehicle
Berberis Investments Ltd		100.00	Channel Islands	Holding company
ERB Hellas Funding Ltd Eurobank Cyprus Ltd		100.00 100.00	Channel Islands Cyprus	Special purpose financing vehicle Banking
CEH Balkan Holdings Ltd		100.00	Cyprus	Holding company
Chamia Enterprises Company Ltd		100.00	Cyprus	Special purpose investment vehicle
ERB New Europe Funding III Ltd		100.00	Cyprus	Finance company
Foramonio Ltd		100.00	Cyprus	Real estate
NEU 03 Property Holdings Ltd		100.00	Cyprus	Holding company
NEU II Property Holdings Ltd		100.00	Cyprus	Holding company
NEU BG Central Office Ltd		100.00	Cyprus	Holding company
NEU Property Holdings Ltd		100.00	Cyprus	Holding company
Densho Investments Ltd		100.00	Cyprus	Real estate
Lenevino Holdings Ltd		100.00	Cyprus	Real estate
Eurobank Private Bank Luxembourg S.A.		100.00	Luxembourg	Banking
Eurobank Fund Management Company		100.00	Luxembourg	Fund management
(Luxembourg) S.A.
Eurobank Holding (Luxembourg) S.A.		100.00	Luxembourg	Holding company
ERB Lux Immo S.A.	c	100.00	Luxembourg	Real estate
ERB New Europe Funding B.V.		100.00	Netherlands	Finance company
ERB New Europe Funding II B.V.		100.00	Netherlands	Finance company
ERB New Europe Holding B.V.		100.00	Netherlands	Holding company
Bancpost S.A.		99.15	Romania	Banking
ERB IT Shared Services S.A.		100.00	Romania	Informatics data processing
ERB Leasing IFN S.A.		100.00	Romania	Leasing
ERB Retail Services IFN S.A.		100.00	Romania	Credit card management

Selected Explanatory Notes to the Condensed Consolidated Interim Financial Statements

		Percentage	Country of
Name	Note	holding	incorporation	Line of business
Eurobank Finance S.A. (1)		100.00	Romania	Investment banking
Eurobank Property Services S.A.		100.00	Romania	Real estate services
IMO Property Investments Bucuresti S.A.		100.00	Romania	Real estate services
IMO-II Property Investments S.A.		100.00	Romania	Real estate services
Eurobank A.D. Beograd		99.99	Serbia	Banking
ERB Leasing A.D. Beograd (1)		99.99	Serbia	Leasing
ERB Property Services d.o.o. Beograd		100.00	Serbia	Real estate services
IMO Property Investments A.D. Beograd		100.00	Serbia	Real estate services
ERB Istanbul Holding A.S.		100.00	Turkey	Holding company
ERB Hellas Plc		100.00	United Kingdom	Special purpose financing vehicle
Anaptyxi SME I Plc		-	United Kingdom	Special purpose financing vehicle
Karta II Plc		-	United Kingdom	Special purpose financing vehicle
Themeleion II Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Themeleion III Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Themeleion IV Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Themeleion Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Tegea Plc		-	United Kingdom	Special purpose financing vehicle

(1) Entities under liquidation at 31 March 2018.

The following entities are not included in the condensed consolidated interim financial statements mainly due to immateriality:

(i) Holding and other entities of the Group's special purpose financing vehicles: (a) Themeleion III Holdings Ltd, Themeleion IV Holdings Ltd, Themeleion V Mortgage Finance Plc, Themeleion VI Mortgage Finance Plc, Anaptyxi APC Ltd and Byzantium II Finance Plc, which are under liquidation and (b) Anaptyxi SME I Holdings Ltd, Karta II Holdings Ltd and Tegea Holdings Ltd.

(ii) Dormant/under liquidation entities: Enalios Real Estate Development S.A. and Hotels of Greece S.A.

(iii) Entities controlled by the Group pursuant to the terms of the relevant share pledge agreements: Finas S.A., Rovinvest S.A., Provet S.A. and Promivet S.A.

(a) Eurobank Household Lending Services S.A., Greece

In December 2017, the Board of Directors of the Bank and its subsidiary Eurobank Household Lending Services S.A. decided the merger of the two companies, by absorption of the latter by the former. The procedure for the approval from the supervisory authorities is in progress.

(b) Modern Hoteling, Greece

In January 2018, the Bank established the wholly owned subsidiary, Modern Hoteling, a real estate company operating in Greece.

(c) ERB Lux Immo S.A., Luxembourg

In January 2018, the Bank's subsidiary Eurobank Private Bank Luxembourg S.A. acquired 100% of the shares and voting rights of BHF Lux Immo S.A. for a cash consideration of € 8.7 million. The acquisition was accounted for as a business combination using the purchase method of accounting. At the date of acquisition, the fair value of the total assets amounted to € 19.2 million, while of the total liabilities (mainly referring to intragroup funding) amounted to € 9.3 million. Accordingly, the effect of the transaction was € 1.2 million gain, which has been recognized in "Other income/(expenses)". Additionally, at the acquisition date, according to the decision of the General Meeting of the shareholders of the acquired company its name changed to ERB Lux Immo S.A.

(d) ERB Property Services Sofia A.D., Bulgaria

In January 2018, the Bank and its subsidiary Eurobank Property Services S.A. disposed their participation in ERB Property Services Sofia A.D. to Eurobank Bulgaria A.D., where the Group's percentage holding is 99.99% and thus, the Group participation to the company decreased from 100% to 99.99%.

(e) IMO Central Office E.A.D., Bulgaria

In January 2018, the Bank's subsidiary NEU BG Central Office Ltd disposed its participation in IMO Central Office E.A.D. to Eurobank Bulgaria A.D., where the Group's percentage holding is 99.99% and thus, the Group participation to the company decreased from 100% to 99.99%.

(f) ERB Leasing Bulgaria EAD, Bulgaria

In February 2018, the Bank established the wholly owned subsidiary ERB Leasing Bulgaria EAD, as a result of the transformation of ERB Leasing EAD through a spin-off, whereby part of the assets and liabilities of the latter were passed to the new established company.

(g) Mesal Holdings Ltd, Cyprus

In March 2018, Eurobank Cyprus Ltd disposed of the 100% of the shares and voting rights of Mesal Holdings Ltd.

Post balance sheet event

Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A., Romania

On 4 April 2018, the Bank announced the completion of the sale of Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A. in Romania (Romanian disposal group) to Banca Transilvania. Hence, as of that date, the subsidiaries of the Romanian disposal group are not consolidated (note 12).

16. Investments in associates and joint ventures

As at 31 March 2018, the Group's investments in associates and joint ventures amounted to € 152 million (31 December 2017: € 156 million). The following is the listing of the Group's associates and joint ventures as at 31 March 2018:

		Country of		Group's
Name	Note	incorporation	Line of business	share
Femion Ltd		Cyprus	Special purpose investment vehicle	66.45
Tefin S.A. (1)		Greece	Dealership of vehicles and machinery	50.00
Sinda Enterprises Company Ltd		Cyprus	Special purpose investment vehicle	48.00
Singidunum - Buildings d.o.o. Beograd	a	Serbia	Development of building projects	31.74
Alpha Investment Property Kefalariou S.A.		Greece	Real estate	41.67
Global Finance S.A. (2)		Greece	Investment financing	33.82
Rosequeens Properties Ltd		Cyprus	Special purpose investment vehicle	33.33
Rosequeens Properties SRL		Romania	Real estate	33.33
Famar S.A. (2)		Luxembourg	Holding company	23.55
Odyssey GP S.a.r.l.		Luxembourg	Special purpose investment vehicle	20.00
Eurolife ERB Insurance Group Holdings S.A. (2)		Greece	Holding company	20.00

(1) In December 2013, the Extraordinary General Meeting of shareholders of the company decided its liquidation.

(2) Eurolife Insurance group (Eurolife ERB Insurance Group Holdings S.A. and its subsidiaries), Global Finance group (Global Finance S.A. and its subsidiaries) and Famar group (Famar S.A. and its subsidiaries) are considered as Group's associates.

In the first quarter of 2018, the Group's share of results of Eurolife Insurance group amounting to € 12.9 million includes ca € 10 million gains on sale of investment securities recycled to the income statement from the other comprehensive income (ca € 7 million, after tax).

(a) Singidunum - Buildings d.o.o. Beograd, Serbia

In February 2018, the Group's participation in Singidunum decreased from 32.84% to 31.74%, following a share capital increase in favor of the other shareholder, Lamda Development B.V., in accordance with the relevant shareholders agreement.

Post balance sheet event

Singidunum - Buildings d.o.o. Beograd, Serbia

In April 2018, the Group's participation in Singidunum decreased from 31.74% to 31.44%, following an additional share capital increase in favor of the other shareholder, Lamda Development B.V., in accordance with the relevant shareholders agreement.

17. Investment property

The movement of investment property (net book value) is as follows:

	31 March
	2018
	€ million
Cost:
Balance at 1 January	301
Arising from acquisition (1)	17
Transfers from/to repossessed assets	1
Other transfers	5
Disposals and write-offs	(9)
Impairments	(2)
Balance at 31 March	313
Accumulated depreciation:
Balance at 1 January	(24)
Transfers	(1)
Disposals and write-offs	1
Charge for the year	(1)
Balance at 31 March	(25)
Net book value at 31 March	288

(1) Relates to the acquisition of ERB Lux Immo S.A. (note 15).

18. Other assets

	31 March	31 December
	2018	2017
	€ million	€ million
Receivable from Deposit Guarantee and Investment Fund	706	704
Repossessed properties and relative prepayments	408	375
Pledged amount for a Greek sovereign risk financial guarantee	241	241
Income tax receivable	153	147
Other guarantees	55	62
Prepaid expenses and accrued income	89	82
Other assets	157	113
Total	1,809	1,724

As at 31 March 2018, other assets net of provisions, amounting to € 157 million include, among others, receivables related to (a) settlement balances with customers, (b) public entities, (c) legal cases and (d) brokerage activity.

19. Due to central banks

31 March 31 December
2018 2017
€ million € million
7,080 9,994

As at 31 March 2018, the Bank's dependency on Eurosystem financing facilities decreased to € 7.1 bn (of which € 5.7 bn funding from ELA), mainly due to deposit inflows and increased market repos on covered bonds and Greek Government bonds (31 December 2017: € 10 bn, of which € 7.9 bn from ELA). The Eurosystem funding further declined to € 5.5 bn on 30 April 2018, of which € 4.1 bn from ELA.

20. Due to credit institutions

	31 March	31 December
	2018	2017
	€ million	€ million
Secured borrowing from credit institutions	4,618	3,368
Borrowings from international financial and similar institutions	519	491
Interbank takings	32	6
Current accounts and settlement balances with banks	97	132
Total	5,266	3,997

As at 31 March 2018, the majority of secured borrowing transactions with other banks were conducted with foreign financial institutions with collaterals Greek treasury bills, Greek government bonds and covered bonds issued by the Bank (notes 14 and 22). As at 31 March 2018, borrowings from international financial and similar institutions include borrowings from European Investment Bank, European Bank for Reconstruction and Development and other similar institutions.

21. Due to customers

31 March	31 December
2018	2017
€ million	€ million
Savings and current accounts 19,269	19,412
Term deposits 15,930	14,370
Repurchase agreements 53	53
Other term products (note 22) 8	8
Total 35,260	33,843

Following the transition to IFRS 9, the Group has revoked the fair value option designation under IAS 39 for structured deposits and measures them at amortized cost after separating the embedded derivatives from the host contracts. As at 31 March 2018, the carrying amount of these deposits is € 2 million.

The other term products relate to senior medium-term notes held by the Group's customers, amounting to € 8 million (31 December 2017: € 8 million).

22. Debt securities in issue

	31 March	31 December
	2018	2017
	€ million	€ million
Subordinated notes (Tier 2)	958	-
Covered bonds	501	497
Medium-term notes (EMTN) (note 21)	51	52
Total	1,510	549

Following the transition to IFRS 9, the Group has revoked the fair value option designation under IAS 39 for structured notes and measures them at amortized cost after separating the embedded derivatives from the host contracts. As at 31 March 2018, the carrying amount of these notes is € 3 million.

Tier 2 Capital instruments

In the context of the first stream of Hellenic Republic's plan to support liquidity in the Greek economy under Law 3723/2008, the Bank had issued preference shares with nominal value of € 950 million, which were subscribed by the Hellenic Republic. On 18 January 2018, the Bank announced the completion of the full redemption of the said preference shares, according to the provisions of par. 1a, article 1 of Law 3723/2008 and the decisions of its Extraordinary General Meeting of the Shareholders (ordinary and preference) as of 3 November 2017.

The above redemption was completed partially with cash and partially with the issuance of Tier 2 capital instruments of total amount € 950,000,000 according to the EU Regulation 575/2013 and does not have any impact on the Group's CET1 based on the full implementation of Basel III rules.

Pursuant to the terms of their issuance, the above Tier 2 capital instruments have a maturity of ten years (until 17 January 2028) and pay fixed nominal interest rate of 6.41% (recognized in the income statement), which shall be payable semi-annually at the last day of the sixth and twelfth month each year. On 31 March 2018, the said instruments amount to € 958 million, including € 4 million issuance costs and € 12 million accrued interest.

Further information, in respect of the Tier 2 capital instruments and the relevant legal framework is provided in the note 41 of the consolidated financial statements for the year ended 31 December 2017.

Medium-term notes (EMTN)

During the period ended 31 March 2018, the Group proceeded with the repurchase of medium term notes of face value of € 2 million.

Covered bonds

During the period ended 31 March 2018, the Group proceeded with the issue of covered bonds of face value of € 200 million, fully retained by the Bank.

Financial disclosures required by the Act 2620/28.08.2009 of the Bank of Greece in relation to the covered bonds issued, are available at the Bank's website (Investor Report for Covered Bonds Programs).

23. Other liabilities

	31 March	31 December
	2018	2017
	€ million	€ million
Balances under settlement (1)	289	252
Other provisions	192	125
Deferred income and accrued expenses	120	81
Standard legal staff retirement indemnity obligations	49	50
Income taxes payable	11	7
Deferred tax liabilities (note 11)	2	4
Other liabilities	141	165
Total	804	684

(1) Includes settlement balances relating to bank cheques and remittances, credit card transactions, other banking and brokerage activities.

As at 31 March 2018, other liabilities amounting to € 141 million mainly consist of payables relating with (a) suppliers and creditors, (b) contributions to insurance organizations, (c) duties and other taxes and (d) trading liabilities.

As at 31 March 2018, other provisions amounting to € 192 million (31 December 2017: € 125 million) mainly include: (a) € 64 million for outstanding litigations and claims in dispute (note 28), (b) € 61 million for credit related commitments, which as of 1 January 2018 is monitored separately from the impairment allowance on loans and advances to customers, (c) € 45 million for sovereign risk financial guarantee, (d) € 10 million for restructuring costs (mainly related to the Voluntary Exit Scheme (VES)) and (e) € 9 million for other operational risk events.

The implementation of the VES, already in force during 2017, was designed for the Group's employees in Greece in line with the principal commitments of the Bank's restructuring plan (note 5). In that context an additional scheme with the same terms was announced on 19 January 2018 and implemented for the employees of specific eligible units in Greece. The total cost of this scheme, which has been recognized in the first quarter of 2018, is € 36 million, net of provision for retirement benefits, while the estimated annual saving as a result of the additional scheme amounts to € 12 million. Up to 31 March 2018, the cost for the VES amounted to € 155 million, net of provision for retirement benefits.

24. Ordinary share capital, share premium and treasury shares

The par value of the Bank's shares is € 0.30 per share. All shares are fully paid. The movement of ordinary share capital, share premium and treasury shares is as follows:

	Ordinary share capital € million	Treasury shares € million	Net € million	Share premium € million	Treasury shares € million	Net € million
Balance at 1 January 2018	656	(1)	655	8,056	(1)	8,055
Purchase of treasury shares	-	(1)	(1)	-	(1)	(1)
Sale of treasury shares	-	1	1	-	0	0
Balance at 31 March 2018	656	(1)	655	8,056	(2)	8,054

The following is an analysis of the movement in the number of shares issued by the Bank:

	Number of shares
	Issued ordinary	Treasury
	shares	shares	Net
Balance at 1 January 2018	2,185,998,765	(1,802,710)	2,184,196,055
Purchase of treasury shares	-	(1,956,076)	(1,956,076)
Sale of treasury shares	-	820,082	820,082
Balance at 31 March 2018	2,185,998,765	(2,938,704)	2,183,060,061

Treasury shares

In the ordinary course of business, the Bank's subsidiaries may acquire and dispose of treasury shares. According to paragraph 1 of Article 16c of Law 3864/2010, during the period of the participation of the HFSF in the share capital of the Bank it is not permitted to the Bank to purchase treasury shares without the approval of the HFSF.

25. Preferred securities

The outstanding amount of preferred securities issued by the Group through its Special Purpose Entity, ERB Hellas Funding Limited, as at 31 March 2018 (same balance as at 31 December 2017) is analyzed as follows:

	Series A	Series B	Series C	Series D	Total
	€ million	€ million	€ million	€ million	€ million
Balance at 31 March 2018	2	4	18	19	43

All obligations of the issuer, in respect of the aforementioned issues of preferred securities, are guaranteed on a subordinated basis by the Bank. The analytical terms of each issue along with the rates and/or the basis of calculation of preferred dividends are available at the Bank's website. Following the redemption of the Greek State – owned preference shares (note 22) on 17 January 2018, and in accordance with the terms of the preferred securities, ERB Hellas Funding Ltd declared and paid the non-cumulative dividends of € 0.4 million in total on the Series D, B and A that were payable on 29 January, 2 February and 18 March 2018, respectively. As at 31 March 2018, the dividend attributable to preferred securities holders amounted to € 1 million (€ 0.7 million, after tax).

Post balance sheet event

ERB Hellas Funding proceeded with the payment of non-cumulative dividends of € 0.7 million on series C, D and B on 9 April, 29 April and 2 May 2018, respectively.

26. Fair value of financial assets and liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price). When a quoted price for an identical asset or liability is not observable, fair value is measured using another valuation technique that is appropriate in the circumstances, and maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect assumptions that market participants would use when pricing financial instruments, such as quoted prices in active markets for similar instruments, interest rates and yield curves, implied volatilities and credit spreads.

The Group's financial instruments carried at fair value or at amortized cost for which fair value is disclosed are categorized into the three levels of the fair value hierarchy based on whether the inputs to the fair values are observable or unobservable, as follows:

• (a) Level 1-Financial instruments measured based on quoted prices (unadjusted) in active markets for identical financial instruments that the Group can access at the measurement date. A market is considered active when quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and represent actually and regularly occurring transactions. Level 1 financial instruments include actively quoted debt instruments held or issued by the Group, equity and derivative instruments traded on exchanges, as well as mutual funds that have regularly and frequently published quotes.
• (b) Level 2-Financial instruments measured using valuation techniques with inputs, other than level 1 quoted prices, that are observable either directly or indirectly, such as: i) quoted prices for similar financial instruments in active markets, ii) quoted prices for identical or similar financial instruments in markets that are not active, iii) inputs other than quoted prices that are directly or indirectly observable, mainly interest rates and yield curves observable at commonly quoted intervals, forward exchange rates, equity prices, credit spreads and implied volatilities obtained from internationally recognized market data providers and iv) other unobservable inputs which are insignificant to the entire fair value measurement. Level 2 financial instruments include over-the-counter (OTC) derivatives and less liquid debt instruments held or issued by the Group.
• (c) Level 3-Financial instruments measured using valuation techniques with significant unobservable inputs. When developing unobservable inputs, best information available is used, including own data, while at the same time market participants' assumptions are reflected (e.g. assumptions about risk). Level 3 financial instruments include unquoted equities or equities traded in markets that are not considered active, certain OTC derivatives and loans and advances to customers.

Financial instruments carried at fair value

The fair value hierarchy categorization of the Group's financial assets and liabilities carried at fair value is presented in the following tables:

		31 March 2018
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million
Securities held for trading	91	0	1	92
Investment securities at FVTPL	47	5	41	93
Derivative financial instruments	1	1,699	1	1,701
Investment securities at fair value through OCI	5,353	135	-	5,488
Loans and advances to customers at FVTPL	-	-	61	61
Financial assets measured at fair value	5,492	1,839	104	7,435
Derivative financial instruments	1	1,718	-	1,719
Trading liabilities	10	-	-	10
Financial liabilities measured at fair value	11	1,718	-	1,729

	31 December 2017
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million
Financial instruments held for trading	48	0	1	49
Derivative financial instruments	0	1,877	1	1,878
Available-for-sale investment securities	5,464	4	41	5,509
Financial assets measured at fair value	5,512	1,881	43	7,436
Derivative financial instruments	0	1,853	-	1,853
Due to customers:
- Structured deposits	-	2	-	2
Debt securities in issue:
- Structured notes	-	3	-	3
Financial liabilities measured at fair value	-	1,858	-	1,858

The Group recognizes transfers into and out of the fair value hierarchy levels at the beginning of the quarter in which a financial instrument's transfer was effected. During the period ended 31 March 2018, the Group transferred OTC derivative instruments of € 1 million from Level 3 to Level 2 following the assessment on the significance of the CVA adjustment to their entire fair value measurement, calculated based on internal rating models.

Reconciliation of Level 3 fair value measurements

	31 March
	2018
	€ million
Balance at 1 January	43
Transition to IFRS 9	65
Transfers into Level 3	0
Transfers out of Level 3	(1)
Additions, net of disposals and redemptions	(4)
Total gain/(loss) for the period included in profit or loss	(1)
Foreign exchange differences and other	2
Balance at 31 March	104

Group's valuation processes and techniques

The Group's processes and procedures governing the fair valuations are established by the Group Market Counterparty Risk Sector in line with the Group's accounting policies. The Group uses widely recognized valuation models for determining the fair value of common financial instruments that are not quoted in an active market, such as interest and cross currency swaps, that use only observable market data and require little management estimation and judgment. Specifically, observable prices or model inputs are usually available in the market for listed debt and equity securities, exchange-traded and simple over-the-counter derivatives. Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determining fair values.

Where valuation techniques are used to determine the fair values of financial instruments that are not quoted in an active market, they are validated against historical data and, where possible, against current or recent observed transactions in different instruments, and periodically reviewed by qualified personnel independent of the personnel that created them. All models are certified before they are used and models are calibrated to ensure that outputs reflect actual data and comparative market prices. Fair values estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties, to the extent that market participants would take them into account in pricing the instrument. Fair values also reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and the counterparty, where appropriate.

Valuation controls applied by the Group may include verification of observable pricing, re-performance of model valuations, review and approval process for new models and/or changes to models, calibration and back-testing against observable market transactions, where available, analysis of significant valuation movements, etc. Where third parties' valuations are used for fair value measurement, these are reviewed in order to ensure compliance with the requirements of IFRS 13.

OTC derivative financial instruments are fair valued by discounting expected cash flows using market interest rates at the measurement date. Counterparty credit risk adjustments and own credit risk adjustments are applied to OTC derivatives, where appropriate. Bilateral credit risk adjustments consider the expected cash flows between the Group and its counterparties under the relevant terms of the derivative instruments and the effect of the credit risk on the valuation of these cash flows. As appropriate in circumstances, the Group considers also the effect of any credit risk mitigating arrangements, including collateral agreements and master netting agreements on the calculation of credit risk valuation adjustments (CVAs). CVA calculation uses probabilities of default (PDs) based on observable market data as credit default swaps (CDS) spreads, where appropriate, or based on internal rating models. The Group applies similar methodology for the calculation of debit-value-adjustments (DVAs), when applicable. Where valuation techniques are based on internal rating models and the relevant CVA is significant to the entire fair value measurement, such derivative instruments are categorized as Level 3 in the fair value hierarchy. A reasonably possible change in the main unobservable input (i.e. the recovery rate), used in their valuation, would not have a significant effect on their fair value measurement.

The Group determines fair values for debt securities held using quoted market prices in active markets for securities with similar credit risk, maturity and yield, quoted market prices in non active markets for identical or similar financial instruments, or using discounted cash flows method.

For debt securities issued by the Group and designated at FVTPL, fair values are determined by discounting the expected cash flows at a risk-adjusted rate, where the Group's own credit risk is determined using inputs indirectly observable, i.e. quoted prices of similar securities issued by the Group or other Greek issuers.

Unquoted equity instruments at FVTPL under IFRS 9 (AFS under IAS 39) are estimated mainly (i) using third parties' valuation reports based on investees' net assets, where management does not perform any further significant adjustments, and (ii) net assets' valuations, adjusted where considered necessary.

Loans and advances to customers for which contractual cash flows do not represent solely payments of principal and interest are measured at fair value through profit or loss. Quoted market prices are not available as there are no active markets where these instruments are traded. Their fair values are estimated on an individual loan basis by discounting the future expected cash flows over the time period they are expected to be recovered, using an appropriate discount rate. Estimates of expected credit loss rates that are incorporated in the fair value calculation represent significant unobservable input and as such the entire fair value measurement is categorized as Level 3 in the fair value hierarchy. A reasonably possible change in the main unobservable input (i.e. expected credit loss rate), would not have a significant effect on their fair value measurement.

Financial instruments not carried at fair value

The following table presents the carrying amounts and fair values of financial assets and liabilities which are not carried at fair value on the balance sheet:

		31 March 2018
	Carrying	Fair
	amount	value
	€ million	€ million
Loans and advances to customers	36,033	35,774
Investment securities at amortised cost	1,416	937
Financial assets not carried at fair value	37,449	36,711
Debt securities in issue	1,510	1,502
Financial liabilities not carried at fair value	1,510	1,502

The assumptions and methodologies underlying the calculation of fair values of financial instruments not carried at fair value are in line with those used to calculate the fair values for financial instruments carried at fair value. Particularly:

• (a) Loans and advances to customers: for loans and advances to customers quoted market prices are not available as there are no active markets where these instruments are traded. The fair values are estimated by discounting future expected cash flows over the time period they are expected to be recovered, using appropriate risk-adjusted rates. Loans are grouped into homogenous assets with similar characteristics, as monitored by Management, such as product, borrower type and delinquency status, in order to improve the accuracy of the estimated valuation outputs. In estimating future cash flows, the Group makes assumptions on expected prepayments, product spreads and timing of collateral realization. The discount rates incorporate inputs for expected credit losses and interest rates, as appropriate;
• (b) Investment securities carried at amortized cost: the fair values of financial investments are determined using prices quoted in an active market when these are available. In other cases, fair values are determined using quoted market prices for securities with similar credit risk, maturity and yield, quoted market prices in non active markets for identical or similar financial instruments, or by using the discounted cash flows method; and
• (c) Debt securities in issue: the fair values of the debt securities in issue are determined using quoted market prices, if available. If quoted prices are not available, fair values are determined based on quotes for similar debt securities or by discounting the expected cash flows at a risk-adjusted rate, where the Group's own credit risk is determined using inputs indirectly observable, i.e. quoted prices of similar securities issued by the Group or other Greek issuers.

For other financial instruments which are short term or re-price at frequent intervals (cash and balances with central banks, due from credit institutions, due to central banks, due to credit institutions and due to customers), the carrying amounts represent reasonable approximations of fair values.

27. Cash and cash equivalents and other information on Interim Cash Flow Statement

For the purpose of the cash flow statement, cash and cash equivalents comprise the following balances with original maturities of three months or less:

	31 March	31 December
	2018	2017
	€ million	€ million
Cash and balances with central banks (excluding mandatory and
collateral deposits with central banks)	1,265	1,103
Due from credit institutions	533	598
Securities held for trading	1	3
Cash and cash equivalents presented within assets of disposal
groups classified as held for sale	285	439
Total	2,084	2,143

Other (income)/losses on investment securities presented in continuing operating activities are analyzed as follows:

	31 March	31 March
	2018	2017
	€ million	€ million
Amortisation of premiums/discounts and accrued interest	(20)	(12)
(Gains)/losses from investment securities	(24)	(14)
Total	(44)	(26)

In the period ended 31 March 2018 in cash flows arising from continuing financing activities it is included a capital return from discontinued operations (i.e. Bancpost S.A.) amounting to € 51 million.

28. Contingent liabilities and other commitments

Credit related commitments are analyzed as follows:

	31 March	31 December
	2018	2017
	€ million	€ million
Guarantees (1) and standby letters of credit	600	579
Other guarantees (medium risk) and documentary credits (2)	376	370
Commitments to extend credit (2)	499	457
Total	1,475	1,406

(1) Guarantees that carry the same credit risk as loans.

(2) Credit related commitments of the Romanian disposal group amounting to € 110 million are not included above (31 December 2017: € 88 million).

As at 31 March 2018, the impairment allowance for expected credit losses on all credit related commitments within the scope of IFRS 9 impairment requirements amounted to € 61 million (1 January 2018: € 62 million).

Legal Proceedings

As at 31 March 2018, a provision of € 70.4 million (€ 6.6 million of which relates to the Romanian subsidiaries classified as held for sale, note 12) has been recorded for a number of legal proceedings outstanding against the Group (31 December 2017: € 70.4 million), as set out in note 23.

Furthermore, the Group is involved in a number of legal proceedings, in the normal course of business, which may be in early stages, their settlement may take years before they are resolved or their final outcome may be considered uncertain. For such cases, after considering the opinion of Legal Services General Division, Management does not expect that there will be an outflow of resources and therefore no provision is recognized.

Against the Bank various remedies have been filed in the form of lawsuits, applications for injunction measures and motions to vacate payment orders in relation to the contractual clauses of mortgage loans granted by the Bank in Swiss Francs (CHF) and the conditions under which the loans were granted. A class action has also been filed. From a Courts view point it may be sustained that the issue is still at a premature stage, considering that a substantial number of first instance Courts judgments has been issued, the majority of which are in favor of the Bank. Furthermore, there are twelve appellate Courts judgments in cases concerning the Bank in favor of the validity of the loans and one against. To date no judgment of the Areios Pagos, being the supreme civil Court, has been passed. On the class action a judgment was issued which accepted it, the Bank, though, has filed an appeal against the first instance judgment the decision of which was issued in February 2018, in favour of the Bank. This decision is subject to a cassation before the Supreme Court. In relation to the individual lawsuits the majority of the judgments issued are in favor of the Bank.

The Management of the Bank is closely monitoring any developments to the relevant cases to determine potential accounting implications in accordance with the Group's accounting policies.

29. Post balance sheet events

Details of post balance sheet events are provided in the following notes:

Note 2.1 - Basis of preparation

• Note 5 Capital Management
• Note 12 Discontinued operations
• Note 15 Shares in subsidiary undertakings
• Note 16 Investments in associates and joint ventures
• Note 19 Due to central banks
• Note 25 - Preferred securities

30. Related parties

As of November 2015, the percentage of the Bank's ordinary shares with voting rights held by the Hellenic Financial Stability Fund (HFSF) stands at 2.38%. The HFSF is considered to have significant influence over the Bank pursuant to the provisions of the Law 3864/2010, as in force, and the Relationship Framework Agreement (RFA) the Bank has entered into with the HFSF on 4 December 2015 replacing the previous one, signed on 26 August 2014. Further information in respect of the HFSF rights based on the aforementioned framework is provided in the note 50 of the consolidated financial statements for the year ended 31 December 2017.

A number of banking transactions are entered into with related parties in the normal course of business and are conducted on an arm's length basis. These include loans, deposits and guarantees. In addition, as part of its normal course of business in investment banking activities, the Group at times may hold positions in debt and equity instruments of related parties.

The outstanding balances of the transactions with (a) the key management personnel (KMP) and the entities controlled or jointly controlled by KMP as well as (b) the associates and joint ventures, and the relating income and expenses are as follows:

	31 March 2018		31 December 2017
	KMP(1) and Entities		KMP(1) and Entities
	controlled or jointly	Associates and	controlled or jointly	Associatesand
	controlled by KMP	joint ventures	controlled by KMP	joint ventures (2)
	€ million	€ million	€ million	€ million
Loans and advances to customers	7.65	45.22	6.84	53.38
Derivative financial instruments	-	-	-	0.01
Other assets	-	3.33	-	4.43
Due to customers	7.47	38.73	5.68	48.02
Debt securities in issue	-	10.32	-	10.21
Other liabilities	-	5.66	0.02	3.74
Guarantees issued	-	4.60	-	4.60
Guarantees received	0.04	-	0.04	-
	Three months ended 31 March 2018		Three months ended 31 March 2017
Net interest income	0.01	(1.39)	0.01	(2.15)
Net banking fee and commission income	0.01	2.13	-	1.32
Net trading income	-	0.10	-	0.01
Gains less losses from investment securities	-	0.09	-	-
Impairment losses on loans and advances
including related fees	-	(9.37)	-	(2.03)
Other operating income/(expenses)	-	(6.00)	-	(5.99)

(1) Includes the key management personnel of the Group and their close family members; as at 31 March 2018, the KMP has four more members compared to 31 December 2017.

(2) As of 4 August 2016, Eurolife insurance group has been accounted for as an associate. The Group's income and expenses from transactions with Eurolife Insurance group including loan insurance premiums, fees from bancassurance and employee benefits (pension and medical insurance) are presented in the above table. Comparative information has been adjusted accordingly.

For the period ended 31 March 2018, there were no material transactions with the HFSF. In addition, as at 31 March 2018 the loans, net of provisions, granted to non consolidated entities controlled by the Bank pursuant to the terms of the relevant share pledge agreements amounted to € 4 million (31 December 2017: € 4.7 million).

For the period ended 31 March 2018, an impairment loss of € 8.0 million (31 December 2017: a reversal of impairment € 2.09 million) has been recorded against loan balances with Group's associates and joint ventures, while the respective impairment allowance amounts to € 11.97 million (31 December 2017: € 21.05 million). In addition, as at 31 March 2018, the fair value adjustment for loans to Group's associates and joint ventures measured at FVTPL amounts to € 17.7 million.

Key management compensation (directors and other key management personnel of the Group)

Key management personnel are entitled to compensation in the form of short-term employee benefits of € 1.53 million (31 March 2017: € 1.28 million) and long-term employee benefits of € 0.21 million (31 March 2017: € 0.42 million, of which € 0.19 million expense relating with Grivalia Properties R.E.I.C. equity settled share based payments). In addition, the Group has formed a defined benefit obligation for the KMP amounting to € 1.58 million as at 31 March 2018 (31 December 2017: € 0.88 million), while the respective cost for the period amounts to € 0.02 million (31 March 2017: € 0.02 million).

31. Board of Directors

The Board of Directors (BoD) was elected by the Annual General Meeting held on 27 June 2013 for a three years term of office. Its term of office, following the resolution of the Bank's Annual General Meeting held on 26 June 2015, expires on 27 June 2018, and in any case until the date the Bank's Annual General Meeting for the year 2018 will take place.

The Bank's Board at its meeting on 9 March 2018, acknowledged that the Bank ceased to be subject to the provisions of the Greek Economy Liquidity Support Program under Law 3723/2008 (note 22) and that the Greek State's right to participate, through its representative, to the Bank's BoD has ceased to exist as of 17 January 2018. Moreover, the BoD decided that Ms. Androniki Boumi is appointed to the Banks' BoD as non-executive Director, her tenure being equal to the tenure of the other BoD members. The appointment of Ms. A. Boumi in the BoD under her new capacity will be announced at the next General Meeting of the Shareholders of the Bank.

Following the above, the BoD is as follows:

N. Karamouzis	Chairman, Non-Executive
F. Karavias	Chief Executive Officer
S. Ioannou	Deputy Chief Executive Officer
T. Kalantonis	Deputy Chief Executive Officer
A. Boumi	Non-Executive
G. Chryssikos	Non-Executive
R. Boucher	Non-Executive Independent
S. Johnson	Non-Executive Independent
B. P. Martin	Non-Executive Independent
J. Mirza	Non-Executive Independent
G. Myhal	Non-Executive Independent
L. Reichlin	Non-Executive Independent
A. Beritsi	Non-Executive (HFSF representative under Law 3864/2010)

Athens, 29 May 2018

CHAIRMAN OF THE BOARD OF DIRECTORS

Nikolaos V. Karamouzis Fokion C. Karavias Harris V. Kokologiannis I.D. No ΑΒ - 336562 I.D. No ΑΙ - 677962 I.D. No AK - 021124 CHIEF EXECUTIVE OFFICER GENERAL MANAGER OF GROUP FINANCE GROUP CHIEF FINANCIAL OFFICER