Alpha Bank opens the debate on dividend

By Leonidas Stergiou

Alpha Bank forecasts net profits of over 300 million euros for 2021, as the results this year are burdened by the cost of securitization and restructuring. However, with the latest moves being promoted by the end of the year, a capital gain of more than € 1 billion is expected, exceeding the targets for capital adequacy, profitability and cost-cutting ratios.

According to the CEO of Alpha Bank, Mr. Vassilis Psaltis, to the analysts, during the presentation of the nine-month results, the goal for an annual increase of profits by 5% by 2024 is achieved. Indicative of the forward movements that will accelerate profitability and capital from the beginning of 2022 is that, if the costs of the Galaxy securitization were taken into account (10 billion euros), then the nine-month profit would be 2.5 billion euros.

The growth of operations, combined with the reduction of costs and high capital, without additional charges from red loan securitizations, will lead the capital ratio to 16% and the Bank to discusses dividend in 2023 or earlier, depending on the regulatory framework.

From the beginning of 2022, Alpha Bank will move with a single-digit percentage of red loans, due to the completion of the latest securitizations and the increase of new up-to-date loans, both through business and retail banking. The arrears ratio in 2021 will close at 13%, with a net credit expansion of over 1 billion euros, while new disbursements will exceed 5 billion. New loans in the nine months amounted to 3.8 billion euros (but there were repayments and other reclassifications 2.8 billion). However, for the fourth quarter alone, the Bank has already reached agreements for financing 1.5 billion euros in investment projects in energy, tourism and infrastructure, in addition to loans related to the Recovery Fund.

As for the Recovery Fund, the contract is to be signed in December and activated in early 2022.

Summarizing the agenda that Mr. Psaltis developed for the analysts, the actions that are being launched are the following:

– Securities of red loans. The Cosmos securitization transaction of 3.4 billion euros is completed, with the re-recognition of the red loans by the end of December.

-Loan sales. In the final phase are the sales of loans of Greece and Cyprus, amounting to 1.3 billion and 2.2 billion euros, respectively. The transactions will be completed within the first half of 2022. Also, in 2022, two additional loan sales totaling 1.2 billion euros will be launched. The procedures will start from the first half of the new year.

-Prometheus. Completion of the deal with Nexi in payment systems in early 2022, bringing a capital gain of 45 basis points.

-Aurora. Synthetic securitization of up-to-date business loans 2 billion, with a capital gain of 1 billion euros by the end of 2021.

-Riviera. Sale of the subsidiary in Albania with a profit of 400 million euros by the end of the year.

-Crown. Sale of the subsidiary in London, with a profit of 200 million euros, in the first half of 2022.

-Skyline. Binding offers for the creation of an investment platform in the real estate market through a consortium. Capital benefit of EUR 400 million. The transaction is expected to be completed in 2022.

At the same time, it is running transformation program, which provides:

-Investments in technology and restructuring of 430 million euros by 2024.

-Annual savings of 60 million euros from 2023.

-Increase of revenues from business banking by 230 million euros and 130 million euros from retail.

Already, from the actions that are being launched, such as the spin-off of Cepal and the voluntary exit, the management of Alpha Bank predicts a reduction of costs by approximately 40% in 2023.

In terms of business development, the target for a net credit expansion of 5 billion euros in Greece (and 8 billion euros as a Group) by 2024 seems to be revealed. Already, 13% of the target has been met by September, when new disbursements of more than 1.5 billion euros are expected in the last quarter.

According to Alpha Bank, in addition to the high demand for business loans due to the Recovery Fund and the strong growth of the Greek economy, strong interest is expected in 2022 from households, both for mortgages and consumer goods. According to the strategic plan, the net credit expansion in 2022 may exceed 2 billion euros, with most of it concerning businesses.

Finally, as for the red loans of the pandemic, they are created at a much lower rate than originally estimated. Of the 600 million euros that were foreseen, today the amount is at the level of 100 million euros. The Bank stated that the borrower support programs will continue in 2022.