Alpha Bank boosts net 2003 profit 63 pct, to 284.2 million

Alpha Bank, Greece’s second largest by assets after National Bank, yesterday announced that group net profit rose 63 percent, boosted by cost containment, a significant rise in revenues from retail banking, added value from a revaluation of its properties and the absorption of Alpha Investments. The profit rise was at the upper end of experts’ forecasts made during previous days. These results led management to decide to propose to the shareholders’ annual general meeting that the dividend be raised by 50 percent, to 0.60 euros per share. Based on the share’s Tuesday closing price of 24.58 euros, this represents a dividend yield of 2.44 percent. Management will also propose a two-for-10 bonus share issue, capitalizing gains after the revaluation of its properties, which resulted in evaluation gains of about 464 million euros. It will also buy back some of its own shares, thus partly reversing last year’s sale of treasury stock worth 383 million euros. The reason for the buyback is to help stabilize the share price, management said. Specifically: – The group’s profit after taxes and minorities rose 63 percent, to 284.2 million euros, from 174.4 million in 2002. – Equity capital more than doubled (116.3 percent increase) to just over 2.14 billion euros. – Net interest income increased 16.6 percent, to 892.4 million euros. – The operating expenses-to-earnings ratio improved significantly, to 54.2 percent, from 60.8 percent in 2002. – Return on equity increased to 18.2 percent, from 17.9 percent in 2002. – Income from retail banking increased 12.8 percent. – Net margin on interest rose to 3 percent, from 2.68 percent in 2002. In the fourth quarter alone, the net margin was 3.17 percent. Income from financial markets also made a significant contribution. At 111.8 million euros, it represented 8.5 percent of the group’s total income. The absorption of Alpha Investments also boosted profits because it led to a decline on taxes paid. But it was the cost-cutting drive which was the crucial factor. During 2003, Alpha Bank merged 49 branches with overlapping activity, resulting also in productivity gains. A total of 14 new branches opened in Greece and abroad and the number of employees was reduced by 4.7 percent. «We continued our efforts at cost containment, missing our target by a touch due to a 10-million-euro bonus payment to staff after strong results,» the bank’s general manager, Marinos Yiannopoulos, said. «Excluding the bonus, the increase in operating expenses would have been just 0.3 percent rather than 1.9 percent. We’ll keep trying for 0 percent.» Part of the added value on property – the result of the revaluation made in order for the bank to conform to International Accounting Standards – will be transferred to reserves in order to help the bank solve the issue of establishing the same social security benefits for employees from the former Ionian Bank, which Alpha acquired in 1999. The result also showed that the capital adequacy ratio increased to 14.8 percent, from 9.8 percent, and that Tier I capital increased to 10.4 percent from 6.9 percent. Yiannis Costopoulos, Alpha Bank group chairman and chief executive, presenting the results yesterday, focused on the importance of capital adequacy and the boost in equity capital. The improvement, he said, will help the bank’s expansion plans. Concerning new merger moves, such as the failed move to merge with National Bank in 2001, Costopoulos said such moves were «no longer in fashion.» He reiterated he was not interested in a major alliance with a foreign banking group.