Global institutions maintain positive outlook on Alpha Bank

Alpha Bank reported its first quarter 2026 results last week, showing solid operational performance but weaker headline profitability due to one-off costs and a softer capital position, according to analyses by major international banks.

According to a report from Greek business outlet Newmoney, a number of foreign institutions, including Citi, JPMorgan, Jefferies and Deutsche Bank, have described the overall picture as positive at an operational level, while highlighting several cautionary elements.

The core message from analysts was that the bank continues to demonstrate strong commercial momentum, particularly in fee income, while maintaining resilient net interest income and confirming its earnings per share target of €0.40 for 2026.

However, the lower-than-expected capital ratio and extraordinary items weighing on the bottom line have resulted in a more balanced overall assessment.

Reported net profit stood at €182 million, falling 9 per cent short of market consensus, mainly due to a €47 million cost linked to a voluntary exit scheme involving around 350 employees.

The programme is expected to generate annual savings of approximately €15 million.

Citi said that normalised net profit reached €221 million, 2 per cent above consensus, with a return on equity of 9.9 per cent after accounting for additional tier capital coupons.

This distinction, analysts noted, separates the bank’s underlying operational strength from the accounting impact of one-off items.

JPMorgan described the quarter as mixed, while acknowledging that the core performance was stronger than the headline figures suggest.

“Underlying net profit of €221 million was 2 per cent higher than consensus and our estimates,” the bank said, maintaining an overweight rating and a target price of €4.40.

It also highlighted that fee income was the key positive driver, while net interest income broadly met expectations.

Fees rose to €140 million, exceeding consensus by 11 per cent and increasing by 29 per cent year-on-year.

The growth was driven by business lending-related fees, insurance activities, investment banking and wealth management.

Jefferies analysts Alexander Demetriou and Joseph Dickerson pointed out that assets under management increased to €26.6 billion, supported by a quarterly rise of €4.2 billion and inflows of €5.8 billion during the period.

This trend reinforces the bank’s strategy to reduce reliance on interest income and improve revenue diversification.

Net interest income reached €416 million, up around 1 per cent quarter-on-quarter and 5 per cent year-on-year, broadly in line with expectations.

Citi said the net interest margin remained broadly stable at 2.15 per cent, while JPMorgan noted that excluding acquisitions, net interest income was flat on a quarterly basis and up 2 per cent annually.

The bank also flagged a margin compression of 8 basis points to 2.12 per cent, indicating that the trajectory of net interest income will remain closely monitored by the market.

At the level of organic activity, Alpha Bank continued to record credit expansion.

Net loans and deposits rose by 1 per cent quarter-on-quarter and 10 per cent year-on-year, according to Citi.

Jefferies said performing exposures increased by 2 per cent quarterly and 11 per cent annually, driven primarily by corporate lending in Greece.

Net credit expansion for the quarter reached €0.5 billion, in line with management guidance.

Asset quality did not raise immediate concerns but also did not provide full comfort.

The cost of risk stood at 44 basis points, slightly better than consensus, while the non-performing exposure ratio edged up to 3.7 per cent from 3.6 per cent at the end of 2025.

JPMorgan noted that the underlying cost of risk at 29 basis points was the lowest of the past five quarters, but added that coverage of non-performing exposures declined to 55 per cent from 58 per cent.

The most sensitive point in the results was the common equity tier 1 ratio, which fell to 14.7 per cent, below market expectations of 15.1 per cent.

Citi attributed the decline to a faster-than-expected increase in risk-weighted assets, which rose by 3.4 per cent quarter-on-quarter.

JPMorgan said that organic capital generation of 25 basis points was offset by the impact of risk-weighted assets, acquisition activity and a distribution accrual set at 55 per cent of reported earnings.

Deutsche Bank maintained a buy recommendation with a target price of €4.45, describing the quarter as strong in terms of activity but weighed down by extraordinary items.

The bank said that underlying trends remain on track, with the stock trading at an adjusted price-to-earnings ratio of 7.9 times for 2026 and 6.9 times for 2027.

The price-to-tangible book value ratio is estimated at 0.9 times for 2026 and 0.8 times for 2027.

Jefferies appeared the most optimistic, maintaining a buy rating and a target price of €4.85, implying a 38 per cent upside from the €3.51 share price.

Citi set a target price of €4.70, with an expected total return of 37.4 per cent, including a dividend yield of 3.5 per cent.

Based on its estimates, the bank is trading at a price-to-earnings ratio of 8.7 times for 2026 and 7.7 times for 2027, with a price-to-book ratio of 0.9 times and 0.8 times respectively.

The next key milestone for investors will be the bank’s investor day scheduled for the second half of 2026, where management is expected to provide greater clarity on medium-term ambitions.

The focus will be on the sustainability of fee income, capital trajectory and shareholder returns.

Alpha Bank enters the remainder of the year with its earnings per share target of €0.40 confirmed, implying an 11 per cent year-on-year increase.

However, analysts indicate that markets are now seeking not only strong operational quarters but also clearer visibility on the balance between growth, capital and valuation.

المصدر: Cyprus Mail