Enhanced dynamics in both profitability and capital adequacy show Alpha Bank Group’s nine-month 2024 results, with Adjusted Profits after Taxes amounting to €665.8 million, up 16% compared to the corresponding period in 2023 despite impact of lower interest rates.

As a result of the Group’s strong profitability, its Return on Equity (RoTE) stood at 14.4% in the nine months, while the bank’s improved operational performance led to a further upgrade of its 2024 profitability target to around 14% ( from >13.5% in August).

The bank’s capital ratios also showed a significant increase, with the FL CET1 Index increasing by 120 basis points since the beginning of the year and reaching 15.5% and the Capital Adequacy Index registering a corresponding increase of 227 bp. and amount to 20.9%.

At the same time, as mentioned in the announced results, the consolidation of the bank’s balance sheet continued, with the Non-Performing Exposures Index (NPE) decreasing by 10 basis points compared to the previous quarter and finally reaching 4.6% in the third quarter quarter, thanks to the enhanced activity shown by regular loan servicing (curings). The reduction of the bank’s risk profile resulted in the Cost of Credit Risk standing at 58 p.a. in the third trimester and 63 m.v. the nine months, in line with the management’s target.

As he pointed out the CEO of Alpha Bank Group Vassilis Psaltis in a statement, “we managed to complete, in less than the expected time, the leg of our cooperation with UniCredit in Romania and accelerated the issuance of AT1 in the amount of EUR 300 million. These actions resulted in Common Equity Tier 1 (CET1) capital rising to 16.5%, following the completion of the transaction in Romania, thus realizing our capital level and MREL target 15 months ahead of schedule. In addition, we launched a series of actions to further reduce the ACE ratio and now forecast it to fall below 4% by the end of the year, achieving our business plan goal two years early.”

The strong profitability recorded by the bank led to a 14% increase in Earnings per Share (EPS) compared to the nine months of 2023, which were 0.27 euros, while according to previous estimates of the management EPS will be around 0 .34 euros in 2024 and are expected to exceed 0.35 euros in 2026.

Finally, according to the bank’s management, the resilience of net interest income despite pressures from falling interest rates, the strong growth of the loan portfolio and the accelerating dynamics of fee income, supported by the expected benefits that will arise as a result of the partnership with UniCredit, are expected to lead to earnings growth and strong capital generation to distribute higher dividends to shareholders.

“Our cooperation with UniCredit is developing rapidly. In addition to the transaction in Romania, in October we launched the distribution of the onemarkets Fund mutual funds in Greece, having already allocated more than 150 million euros to our clients, while the transaction concerning Alpha Life has entered the implementation phase”, said the Mr. Psaltis.

Finally, the administration announced that it aims to accelerate the amortization of DTCs, aiming for zero in 2033.

The bank’s sustainable profitability lays the foundation for further value creation. A pillar of the Group’s enhanced profitability was the resilience of the bank’s Net Interest Income (NII) combined with the strong rise of 11.3% in commission income on an annual basis, as a result of the bank’s leading position in Wealth Management, but also commissions from loan disbursements.

In particular, the bank’s Net Interest Income (NII) remained almost unchanged (down -0.3% on a quarterly basis) and stood at 410 million euros in the third quarter, despite the negative impact of the interest rate cut, benefiting from the lower financing costs, which almost fully offset the lower contribution from loans. The 4% increase in Non-Performing Loans, as well as the repricing of the bank’s bond portfolio, with reinvestments and new placements increasing its overall yield worked as reinforcements in this direction.

Net income from fees and commissions also showed a significant increase, which increased by 8.6% on a quarterly basis and reached 108.8 million euros.

This performance was the result of a strong 46% increase in loan disbursements, as well as card and payment commissions which increased by 4%, while at the same time the growth dynamics of Assets Under Management (AUMs) continued for another quarter (+3 %) and Bancassurance revenue.

On the expenses side, despite inflationary pressures, the bank achieved a further 0.4% reduction in Recurring Operating Expenses in the third quarter, which amounted to €210.7 million, confirming management’s target for 2023.

Alpha Bank’s leading position in Wholesale Banking also contributed to the significant increase in the bank’s profitability, setting a record of new disbursements in Greece amounting to 3 billion euros and recording an increase of 46% compared to the previous quarter. As a result, the Group’s NPL portfolio (excluding the senior bonds of the “Galaxy” and “Cosmos” transactions) increased to €30.9 billion (+4% quarter-on-quarter).

In fact, it is worth noting that the net credit expansion in Greece amounted to 1.2 billion euros, reflecting on the one hand the strong recovery of credit demand mainly from businesses, and on the other hand the general slowdown in loan repayments. “This development allows us to upgrade our target for the year to €2 billion, as a steady flow of disbursements is recorded to finance investment projects, thus supporting our growth prospects. In addition, we are on track to meet our commitment to disburse 3 billion euros in sustainable loans in the period 2023-2025, as we finance a number of flagship projects in this area,” pointed out the CEO of Alpha Bank Group.

According to the bank’s estimates, the dynamics of the expansion of the loan portfolio is expected to continue in the coming quarters, as a result of the strong demand for new loans and the significant investments planned. The Group’s total deposits also showed a remarkable increase, which increased by 1.6 billion euros on a quarterly basis and reached 49.7 billion euros thanks to the inflows of time deposits mainly from businesses. The slow shift to term deposits also continued in Q3, with deposit beta (increase in interest rates on total domestic deposits as a percentage of the increase in market interest rates) standing at 18.2% from 17.2 % in the previous quarter.

Strengthening Asset quality and reducing the bank’s risk profile

Finally, the quality of the bank’s Assets showed a significant improvement, with Non-Performing Exposures remaining stable at 1.7 billion euros, as the reduced inflows were fully compensated by regular loan servicing (curings) and repayments. As a result, the Group’s MEA Index stood at 4.6% in the third quarter, down 10 basis points compared to the previous quarter.

At the same time, the Coverage Ratio of the Group’s Non-Performing Exposures increased to 48% at the end of the third quarter of 2024, while the total Coverage Ratio, including tangible collateral, reached 120%. It is worth noting that the Group’s MEA portfolio is mostly made up of Private MEAs with collateral, as half of them relate to housing loans (46% of the total), while a large part consists of regulated exposures with less than 90 days to maturity delay (34% of the total or 1.3 billion euros).

The Cost of Credit risk also moved in the same direction, which was set at 58 basis points, lower than the management’s initial estimates, confirming the trend observed in reducing the bank’s risk profile and improving the quality of its Assets.