Introduction & Market Context
Alpha Bank (AT:ACBr) (ATHENS:ACBB) reported strong first-quarter results on May 9, 2025, demonstrating resilience amid changing market conditions. The Greek lender posted normalized profit growth of 8% year-over-year despite pressure on interest income, supported by robust fee generation and improved asset quality.
The bank highlighted its limited exposure to potential US tariff impacts, with Greek exports to the US amounting to just 1% of GDP. Alpha Bank’s positioning as less sensitive to interest rate changes compared to peers provides additional protection in the current economic environment.
Trading at €2.25 per share, Alpha Bank is near its 52-week high of €2.35, reflecting investor confidence in the bank’s strategic direction and financial performance.
Quarterly Performance Highlights
Alpha Bank reported a normalized profit after tax of €239 million in Q1 2025, representing an 8% increase year-over-year. Reported profit after tax rose 5% to €223 million.
The bank’s performance was driven by strong fee income growth of 11% year-over-year to €108 million, which helped offset a 6% decline in net interest income to €395 million. Operating expenses remained flat year-over-year at €204 million, benefiting from seasonality and staff cost reductions from the 2024 voluntary separation scheme.
As shown in the following chart, Alpha Bank delivered solid performance across key metrics:
Asset quality continued to improve significantly, with the non-performing exposure (NPE) ratio declining to 3.8% from 6.0% a year earlier. The cost of risk stood at 53 basis points, reflecting a benign credit environment, while NPE coverage increased to 50%.
The bank’s balance sheet strengthened further, with performing loans growing 13% year-over-year to €33.3 billion, primarily driven by corporate lending. Customer funds increased by 8% to €69.5 billion, while tangible book value rose 11% to €7.0 billion.
Strategic Initiatives
Alpha Bank announced the acquisition of AXIA, creating what it describes as "the largest and only vertically integrated Investment Banking and Capital Markets (IBCM) platform in Greece and Cyprus." The transaction, expected to close in Q3 2025, is projected to be accretive to earnings per share by approximately 1.4% from the second year.
The acquisition aligns with Alpha Bank’s strict M&A criteria, including a return on capital employed of 20%, return on tangible equity uplift of approximately 15 basis points, and a CET1 impact of less than 20 basis points.
The bank also highlighted its ongoing partnership with UniCredit (LON:0RLS), which it expects to enhance cross-border capabilities and position Alpha Bank as the bank of choice for cross-border activity. This partnership supports the bank’s focus on accelerating growth in transaction banking, investment banking, and wealth management.
Forward-Looking Statements
Alpha Bank raised its 2027 financial targets, increasing its return on tangible equity (ROTE) guidance from approximately 12% to approximately 13% and earnings per share (EPS) target from >€0.42 to >€0.45. The bank maintained its commitment to a 50% ordinary payout from 2025 onward.
The bank projects EPS growth of 2% in 2025, accelerating to an 11% compound annual growth rate (CAGR) for 2026-2027. Including the effect of share buybacks, Alpha Bank expects an EPS CAGR of 16% for 2024-2027.
As illustrated in the following chart, Alpha Bank’s EPS trajectory is approximately 10% above consensus estimates for both 2025 and 2027:
Alpha Bank’s capital allocation strategy for 2025-2027 focuses on three key areas: organic growth through RWA expansion in wholesale and retail segments, increasing ordinary payouts, and deploying excess capital through share buybacks, extraordinary dividends, and bolt-on acquisitions.
Detailed Financial Analysis
Alpha Bank’s Q1 2025 profit and loss statement shows operating income of €559 million, a 1% increase year-over-year. The bank’s operating expenses remained flat at €204 million, while impairment losses decreased by 24% to €52 million.
Net interest income appears to be stabilizing after recent pressure, while fee income continues to grow, particularly in asset management. The bank’s capital position remains strong, with the CET1 ratio increasing by 163 basis points year-over-year to 16.3%.
Alpha Bank emphasized its structural advantages that should support earnings growth even as interest rates stabilize. These include dynamic management of interest rate sensitivity, strong loan growth in corporate lending, accelerating momentum in fee generation capabilities, and benefits from the UniCredit partnership.
The bank also provided a sensitivity analysis of potential impacts on profitability, noting that a 25 basis point change in interest rates would affect EPS by approximately 1%, while a 10 basis point change in cost of risk would impact EPS by approximately 3%.
Overall, Alpha Bank’s Q1 2025 results demonstrate continued momentum in its business transformation and growth strategy, positioning the bank well to achieve its raised 2027 targets despite macroeconomic uncertainties.
Full presentation:
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