Alpha Bank, Greece’s second largest by market share, yesterday reported a 35.1 percent surge in nine-month net group earnings, on the back of continued growth in retail banking activities, a widening of interest margins and containment of operating costs. Group profit after tax and minorities rose to 190.8 billion euros, from 141.2 million in the same period last year. Net interest income grew 16.1 percent to 655 million euros, against 564 million in the same period last year. The net interest margin rose from 2.6 percent to 3 percent. The ratio of operating expenses to total income improved to 53.8 percent from 60 percent. Third-quarter profit was up 24.6 percent. Total lending in the nine months rose 15.3 percent, mainly as a result of a 38 percent growth in mortgages and consumer credit which now represent 27 percent of the total, boosting the bank’s market share in lending to households to 13 percent, from 9.6 percent in 2001. Mortgages advanced 44.5 percent, bringing Alpha Bank’s market share to 15 percent from 7 percent in 2001. Consumer credit (loans and credit cards) grew 20 percent – an accelerating rate which the bank hopes will soon bring its market share past the present 10 percent. Lending to small and medium-size enterprises (SMEs) grew 15.7 percent and now accounts for 53 percent of Alpha’s total. Corporate loans, including the shipping sector, fell 1.5 percent due to the requirement of repaying a large syndicated loan and the slide in the value of the dollar. Provisions for bad loans came to 473.4 million euros, or 2.4 percent of total lending. Total funds under management rose 1.2 percent to 31.6 billion euros, year-on-year. Savings and demand deposits grew 7.7 percent and 6.4 percent respectively, while clients appeared to be turning to other guaranteed income products. Commission income was up 2.2 percent to 217.6 million euros. General expenses were 1.7 percent higher, with staff payroll costs rising only 0.2 percent. The bank said 90 percent of staff participating in its early retirement program had retired by the end of September, reducing the group’s total number of employees by 6 percent. Alpha has set a target of reducing general expenses, including provisions, by 2005. Overall improvement The performance of the four big banks which have so far announced nine-month results (National, Alpha, EFG Eurobank and Piraeus) – with Emporiki’s, the country’s fourth largest, still outstanding – show a continuing growth in core earnings, containment of costs and a significant improvement in their capital position. The combined nine-month earnings of the four approach 1 billion euros, up 30 percent from the same period last year, which is expected to lead to a more generous dividend policy and contribute to an improvement in the stock market climate. Banks in recent years have turned toward strong emphasis on the growth of core activities, particularly mortgages and consumer credit and this is reflected in a significant rise in net interest income and an improved interest margin. As a whole, they have boosted their capital bases and improved their capital adequacy indicators, which is necessary for their further growth and their participation in the expected new round of mergers and acquisitions.