Alpha Bank’s Earnings Call Highlights Robust Growth

Alpha Bank ((GR:ALPHA)) has held its Q4 earnings call. Read on for the main highlights of the call.

Alpha Bank’s recent earnings call painted a picture of robust financial health, marked by significant growth in profits and capital ratios. The bank’s strategic initiatives have borne fruit, contributing to a positive overall sentiment despite challenges with operational costs and net interest income pressure. The achievements in profitability, strategic progress, and asset quality were particularly noteworthy, overshadowing the less favorable aspects of the report.

Strong EPS and Profit Growth

Alpha Bank reported an impressive earnings per share (EPS) of 35 cents, reflecting a 9% annual growth in normalized profits. This translated into a 14% return on tangible equity, highlighting the bank’s strong financial performance and effective management strategies.

Capital Ratio and Shareholder Returns

The bank’s capital ratio climbed to 16.3%, with reported profits reaching 654 million. This robust performance allowed for 43% of profits to be earmarked for distributions, including a significant share buyback, demonstrating Alpha Bank’s commitment to delivering value to its shareholders.

Strategic Progress and Loan Growth

Alpha Bank’s profitability doubled due to structural improvements and strategic reallocation of capital. The bank also achieved a 16% increase in performing loans over two years, underscoring its successful growth strategy.

Successful M&A and Partnerships

The acquisition of fintech company FlexFin and the agreement to acquire AstroBank’s assets in Cyprus have significantly boosted Alpha Bank’s market position and profitability, marking a successful year in mergers and acquisitions.

Strong Fee and Commission Growth

Fee and commission income saw a 12% year-on-year increase, surpassing 400 million in guidance. This growth was driven by asset management and lending activities, contributing positively to the bank’s revenue streams.

Asset Quality and Capital Position

The bank’s non-performing exposure (NPE) ratio was reduced to 3.8%, with a coverage ratio of 53%. The CET1 ratio increased, supported by significant capital generation, allowing for both growth and distributions.

Higher Operational Costs

Operational costs were higher than expected, primarily due to IT investments and delays in voluntary separation schemes, which led to overlapping staff costs. This was a notable challenge in the bank’s financial performance.

Net Interest Income Pressure

Net interest income plateaued due to spread pressure and lower rates. The bank anticipates further pressure in 2026 due to lag effects, which remains a concern for future financial performance.

One-off Charges Impact

The bank faced a 40 million cost from inorganic NP reduction, along with additional charges for school reconstruction and a voluntary separation scheme, totaling 36 million in one-off expenses.

Forward-Looking Guidance

Looking ahead, Alpha Bank has set ambitious targets for 2025, including a cautious net credit expansion of over 2 billion and a forecasted net interest income of over 1.65 billion post rate declines. The bank aims for a minimum 50% payout of profits, with a preference for buybacks over cash dividends, reflecting a strategic approach to shareholder returns.

In summary, Alpha Bank’s earnings call highlighted a strong financial performance, with significant growth in profits and strategic progress. While challenges such as operational costs and net interest income pressure were noted, the overall sentiment was positive, with promising forward-looking guidance underscoring the bank’s commitment to sustained growth and shareholder value.