By George Georgiopoulos

ATHENS (Reuters) - Robust lending at home and across southeast Europe drove 2007 earnings 32.1 percent higher at EFG Eurobank (EFGr.AT: Quote, Profile, Research), Greece's second-largest bank, last year as investments abroad began to pay off.

Eurobank said on Monday full-year group net profit rose to 851 million euros ($1.23 billion), above forecasts. Analysts polled by Reuters were on average expecting profit to grow 30 percent to 836 million euros. The company had given guidance for about 820 million euros.

Greek lenders have been expanding in the Balkan markets and Turkey to capture new areas of growth. Eurobank is also present in Romania, Bulgaria, Poland, Serbia, Ukraine and Turkey.

The bank said the reported net profit does not exclude a special tax of 16 million euros and its financial contribution to victims of forest fires in the summer. Subtracting these sums, net profit came to 815 million euros.

Operations outside Greece contributed 72 million euros to group profit versus a loss of 3.5 million in 2006.

"Results were better than expected as regards profit, net interest income and trading gains," said analyst Manos Hatzidakis at Pegasus Securities.

Despite the credit crisis, Eurobank stuck to its 2008-10 business plan targets which project earnings of 1.55 billion euros by 2010. It is aiming for profit of 1.03 billion euros this year, with 170 million euros coming from New Europe.

The group, whose network has expanded to more than 1,500 branches in eight countries, said it is seeking to squeeze its cost-to-income ratio below 45 percent by 2010 from 48.1 percent in 2007.