Earnings call transcript: Alpha Bank Q2 2025 sees strong profit growth

Alpha Bank SA (ACBB) reported robust Q2 2025 results, with profit after tax surging 31% quarter-on-quarter to $294 million, driven by a 13% increase in fee income and a significant 1% sequential rise in net interest income, reversing a five-quarter decline. The bank also reduced its cost of risk to 45 basis points and improved its NPE ratio to 3.5% through proactive balance sheet management. Strategic advancements, notably a landmark partnership with Hellenic Post and deepening collaboration with UniCredit (which increased its stake to over 20%), are expanding reach and revenue streams. Alpha Bank projects a 2% upgrade to its EPS guidance, anticipating 9% annual growth, and maintains a strong capital position with a 15.7% CET1 ratio, supporting a 50% dividend payout.

Analysis

Alpha Bank SA (ACBB) delivered a robust second-quarter 2025 performance, characterized by significant profit growth and successful strategic execution. Profit after tax surged 31% quarter-on-quarter to $294 million, translating to a normalized return on tangible equity of 14.2%. A pivotal development was the 1% sequential increase in net interest income, reversing a five-quarter declining trend and signaling a potential bottoming out of margin pressure. This was complemented by strong fee income growth of 13% quarterly and 21% year-on-year, underscoring successful revenue diversification. Management demonstrated prudent balance sheet de-risking by utilizing a one-off deferred tax asset gain to absorb provisions, which improved the non-performing exposure (NPE) ratio to 3.5% and led to a reduction in the full-year cost of risk guidance to 45 basis points. Strategically, the bank is leveraging key partnerships to drive future growth; the alliance with Hellenic Post significantly expands its physical footprint to over 1,400 locations, while the deepened relationship with UniCredit, which increased its stake to over 20%, is already yielding tangible cross-border commercial benefits. The bank's strong capital position, with a fully loaded CET1 ratio of 15.7%, supports an upgraded EPS guidance and a commitment to a dividend payout ratio exceeding 50%.

Key Decisions for Investors

• Given the strong quarterly results, positive inflection in net interest income, and an upgraded EPS outlook, investors may view the current Price-to-Book ratio of 0.83 as an attractive entry point.
• Investors should closely monitor the execution and monetization of strategic partnerships with UniCredit and Hellenic Post, as these are positioned as primary drivers for sustainable fee income and long-term earnings growth beyond 2025.
• With a CET1 ratio of 15.7% and a stated policy of distributing over 50% of profits, shareholders should anticipate consistent capital returns, including the confirmed interim cash dividend, and remain attentive to potential for more generous distributions or buybacks.
• While the outlook is positive, it is prudent to watch for signs of increased pressure on lending spreads, as management acknowledged a highly competitive landscape which could impact future net interest margins if not managed with discipline.