Alpha Services and Holdings SA (ALBKF) Q1 2025 Earnings: Profit Surge and Strategic Ambitions Drive Growth

Alpha Bank’s Q1 2025 earnings report underscores a resilient financial performance amid macroeconomic headwinds, with profit growth, strategic acquisitions, and strengthened capital positioning the lender for sustained expansion. The results highlight a bank leveraging its defensive balance sheet and proactive initiatives to capitalize on Greek economic recovery and global fintech opportunities.

Financial Highlights: Profit Growth Amid Mixed Performance

Alpha Bank reported a 5.2% year-on-year rise in reported profit after tax to €223.3 million, while normalized profit (excluding one-time adjustments) jumped 7.6% to €239.3 million, signaling core strength. However, the Net Interest Income (NII) declined 6.2% year-on-year to €395.3 million, driven by lower interest rates and fewer calendar days. Stripping out seasonal effects, NII fell just 0.4% quarter-on-quarter, reflecting balance sheet resilience.

The bank’s fee income, meanwhile, demonstrated robust momentum. Fee and commission revenue grew 11% year-on-year (16% excluding government impacts) to €107.5 million, fueled by a 53% surge in asset management fees and growth in cards/payments and bancassurance. This underscores Alpha’s success in diversifying revenue streams—a strategic priority for reducing reliance on traditional lending margins.

Cost discipline also shone through: recurring operating expenses fell 13% quarter-on-quarter to €203.6 million, though they rose 1.6% year-on-year due to higher IT and tax costs. The cost of risk improved to 53 basis points, with the NPE ratio holding steady at 3.8% and NPLs dropping to 2.3%, reinforcing asset quality.

Capital Strength and Strategic Leverage

Alpha’s capital metrics remain robust. The Fully-Loaded CET1 ratio stood at 16.3% post-dividend accrual, with an adjusted ratio (including RWA relief) of 16.9%. This provides ample flexibility for growth and shareholder returns. The bank’s Tangible Book Value (TBV) rose 9.1% year-on-year to €7.2 billion, driven by loan growth and strong capital generation.

The acquisition of AXIA Ventures, a venture capital firm, marks a pivotal strategic move. Expected to triple Alpha’s investment banking and securities revenue to over €45 million annually, the deal promises an ROI exceeding 20% and immediate EPS accretion. This aligns with Alpha’s focus on fee-based income diversification, a theme central to its upgraded medium-term targets.

Growth Catalysts and Forward Guidance

Alpha now targets EPS exceeding €0.45 by 2027, up from prior guidance of €0.42, with Return on Tangible Equity (RoTE) rising to 13%. Management projects annual earnings growth of 11% beyond 2025, fueled by:
- Loan growth: Net loans rose €600 million in Q1, with Greek disbursements up 32% year-on-year.
- Deposit stability: Customer funds grew 8.1% year-on-year, including a 12.1% rise in Asset Under Management.
- Defensive NII: Management emphasized that NII would remain stable even if rates halve from 4% to 2%, thanks to liability management and asset re-pricing.

Risks and Opportunities

While Alpha’s Greek dominance and low rate sensitivity are strengths, it remains exposed to domestic economic conditions. The Greek economy is expected to grow in 2025, but geopolitical risks and trade protectionism could disrupt lending demand. Additionally, the deposit beta rising to 24% signals rising funding costs if rates rebound—a risk mitigated by Alpha’s strong liquidity and capital buffers.

Conclusion: A Compelling Growth Story

Alpha Bank’s Q1 results and strategic moves position it as a high-quality play on Greek recovery and financial innovation. With normalized profit growth of 7.6%, a CET1 ratio of 16.9%, and a clear path to 11% annual earnings growth post-2025, the bank is well-equipped to capitalize on its upgraded targets. The AXIA acquisition adds a high-margin revenue stream, while its low rate sensitivity and asset-quality improvements reduce downside risks.

For investors, Alpha Bank’s blend of capital strength, strategic agility, and diversified revenue makes it a standout performer in European banking. With its stock trading at a P/B ratio of 0.8x (well below its 5-year average of 1.1x), the valuation appears attractive, especially as it executes on its growth roadmap. The path ahead is clear: Alpha Bank is building a future where profitability and innovation coexist.