Alpha Bank's Q1 Surge: Strong Net Income and Strategic Momentum Fuel Growth

Alpha Bank delivered a robust Q1 2025 performance, with net income rising 8% year-over-year (YoY) to €239 million, driven by fee income growth and disciplined cost management. The bank’s strategic focus on expanding loans, improving asset quality, and executing acquisitions positions it as a key player in the Greek financial landscape.

Net Income: Fee Growth Outshines Net Interest Margin Headwinds

While net interest income dipped 6% YoY to €395 million due to macroeconomic pressures, fee income surged 11% to €108 million. This diversification highlights Alpha Bank’s success in shifting toward recurring revenue streams. Operating expenses held steady at €204 million, aided by cost-cutting measures from a 2024 restructuring. The non-performing exposure (NPE) ratio improved to 3.8%, down from 6.0% a year earlier, with coverage rising to 50%, signaling stronger balance sheet resilience.

Loan Growth: Corporate Lending Drives Momentum

Performing loans jumped 13% YoY to €33.3 billion, with corporate lending as the primary catalyst. Over two years, loans have expanded 16%, underscoring sustained demand. Management forecasts an additional €2.6 billion in net credit growth for 2025, suggesting further upside.

Strategic Acquisitions and Capital Strength

The pending acquisition of AXIA, expected to close in Q3 2025, will bolster Alpha Bank’s investment banking capabilities. Post-deal, EPS is projected to rise 1.4% from year two onward. Meanwhile, the CET1 ratio improved 163 basis points to 16.3%, reflecting strong capital adequacy. Management raised 2027 targets to 13% return on tangible equity (ROTE) and >€0.45 earnings per share (EPS), up from prior guidance of 12% ROTE and >€0.42 EPS.

Market Context: Limited Rate Sensitivity and Macroeconomic Stability

Alpha Bank’s exposure to interest rate fluctuations is muted compared to peers, with Greek exports to the U.S. contributing just 1% of GDP, reducing tariff risks. Sensitivity analysis shows a 25-basis-point rate shift would impact EPS by ~1%, while a 10-basis-point change in cost of risk would affect EPS by ~3%, indicating manageable macro exposure.

Conclusion: A Compelling Investment Narrative

Trading at €2.25 per share (near its 52-week high of €2.35), Alpha Bank’s stock reflects investor confidence in its strategic execution. With an 8% net income rise, 13% loan growth, and a CET1 ratio of 16.3%, the bank is well-positioned to capitalize on its targets: 2% EPS growth in 2025, accelerating to an 11% CAGR through 2027.

The AXIA acquisition and fee income diversification further strengthen its long-term prospects. While interest rate sensitivity remains low, the bank’s improved asset quality and capital metrics provide a solid foundation for growth. For investors seeking exposure to a resilient Greek financial institution with clear strategic momentum, Alpha Bank’s Q1 results reinforce its appeal.