ECONOMY

Alpha surprises with sharp rise in Q1 profits

Alpha Bank yesterday reported a bigger-than-expected jump in first-quarter income as higher trading gains and its rapid expansion into retail and corporate banking contributed to a near doubling of profits. Consolidated profits after tax and minority rights increased 90 percent to 60 million euros from 32 million euros in the period a year earlier, the second largest bank said. «The bottom-line results were well above our and consensus forecasts,» Manos Giakoumis, banking analyst at P&K Securities, said. «It is the first quarter, after three consecutive years of declining earnings, in which Alpha has returned to profitability.» Key to Alpha’s improved results was the surge in trading income to 34.5 million euros, derived from increased bond, derivative and foreign exchange income. It is the second bank after National Bank to benefit from the bigger-than-expected hike in trading gains. Alpha’s aggressive drive into retail and corporate lending paid off handsomely as the two sectors reported a 38 percent rise in net profits, lifting core operating profits by 35 percent to 62 million euros. Net interest income increased 17.3 percent to 210.1 million euros, underscoring the bank’s continued retail expansion and widening loan spreads which boosted net interest margin to 2.86 percent from 2.54 percent for the year 2002. Housing loans were up 83 percent as a series of new mortgage products helped Alpha double its market share in two years. Consumer credit increased 21 percent at the end of the first quarter. The bank also continued its push into the small and medium-sized enterprises, approving 4,000 loans to firms in the first three months, with lending to the sector up 15.8 percent. Lower fee revenues from loan application charges and credit cards led to a 3.8 percent drop in commission income. A tight control on costs was evident in the 3.2 percent rise in operating expenses and a 1 percent increase in personnel costs. The bank plans to shed 470 employees or 6 percent of its work force this year via a voluntary redundancy scheme.