By Leonidas Stergiou
Doubling the credit expansion, compared to 2021, revenues over 1.5 billion euros, reducing expenses to 900 million euros, reducing red loans to 5% and an organic increase in profitability are the five goals of the updated business plan for Alpha Bank 2022, which was presented to international analysts, with the results of 2021.
As explained by the CEO of Alpha Bank, Mr. Vassilis Psaltis, the fiscal year 2021 was significantly burdened by the intensification of red loan securitizations and other transactions that strengthened the balance sheet, such as sales of loans outside Hercules, the deal for the card network, foreign subsidiaries, the joint venture with DK and the creation of the new Cepal, but also the strategic agreement with Generali. All these moves burdened, on the one hand, the operating expenses, while they reduced the interest income, but also the commissions from other activities, such as bancassurance.
However, from the business plan 2022-2024 it appears that any charges were made once, while recurring benefits are created, both in terms of revenue and in terms of costs. The positive combined effect is the reason that currently puts aside the plan for issuing AT1 bonds of 800 million euros for 2022, as well as other fundraising moves that will depend on market conditions. As mentioned in the presentation, the Bank has a buffer and is going to exceed 15% in the CET1 capital adequacy ratio with only organic profitability. With the current data, the management of Alpha Bank aims to distribute a dividend in 2024 for the year 2023.
In terms of the effects of the Ukrainian crisis, the Group ‘s direct exposure to Russia and Ukraine is limited to € 43 million in loans and € 84 million in deposits.
With regard to other uncertainties, such as inflation and rising interest rates, the head of Alpha Bank noted that we are going through a period of uncertainty that everyone is watching closely. However, he estimated that the business plan would not be affected. Even with interest rate hikes from the ECB, the overall impact will be rather neutral, as the profit on loans improves.
Regarding the 5 goals of 2022:
1. Doubling the net credit expansion, compared to 2021, with the size projected at 2.2 billion euros. In fact, it was noted in the presentation that 1 billion euros have already been “closed” in the first quarter, while another 1 billion are close to contracting. new loans in 2021 exceeded 5 billion euros.
2. Organic revenues will exceed 1.5 billion euros and will move higher than the levels of 2021, despite the environment of low interest rates and securitizations, as they will be offset by changes in the structure of the group (Cepal, Generali, foreign subsidiaries , TLTRO, etc.).
3. Costs will be reduced on a recurring basis to EUR 920 million as a result of transactions and restructuring.
4. The quality of assets will improve, as total exposures will decrease below 3 billion euros, with the non-performing loans ratio at 7% (from 13% in 2021) and non-performing loans at 5% from 6% .
5. Organic capital increase, ie through profitability. In particular, the organic increase in capital in 2021 is estimated at 70 basis points that will bring the CET1 index to 12.5% ​​from 11.8% and to 15.1% in 2024.
Source: Capital
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