Alpha’s results in Q1 disappoint

Shares of Alpha Bank shed 6.45 percent yesterday, closing at 22.34 euros, after Greece’s second-largest lender reported a softer-than-expected 5 percent rise in first-quarter net profit. Releasing results under International Financial Reporting Standards (IFRS), Alpha said first-quarter group net profit rose to 95.2 million euros ($114.8 million), while net interest income grew 10.8 percent to 273.1 million. «First-quarter net profit grew 5 percent year-on-year and 4 percent quarter-on-quarter on an IFRS comparison basis but this was below our forecast by 24 percent and consensus by 17 percent,» said Merrill Lynch analyst Denise Vergot Holle in a note. «We ascribe part of the miss to IFRS,» Vergot wrote. «Another factor seems to have been the impact of the Olympics sponsorship on 2004 revenues and costs, which had not been precisely quantified previously.» Pension deficit relief But Alpha Bank’s sound capital adequacy position, despite a 393-million-euro ($475 million) after-tax pension fund liability, relieved concerns as core Tier 1 capital remained high at 11.1 percent. Analysts at UBS said first-quarter net profit came in 5 percent below their estimates but was offset by the smaller-than-expected pension fund deficit. «In view of the bank’s excess capital of over 700 million euros, the (deficit) can be accommodated without impacting its expansion plans,» UBS analyst Dimitris Spanodimos said in a note. Alpha Bank management said absorption of the pension deficit would not constrain the group’s growth strategy in the Balkans or plans for a higher dividend payout and a share buyback. The group said expansion in Southeastern Europe remained a top strategic objective. Alpha is present in Romania, Serbia, Bulgaria, Albania, Cyprus and the Former Yugoslav Republic of Macedonia. Alpha expects substantial demand for financial products and services over the next decade as incomes grow from a low base in the Balkan markets. Regional operations contributed 11.1 million euros, or 9 percent, of first-quarter group earnings. «Our strategy calls for this percentage to rise to 20 percent by 2007 through the acquisition of Jubanka (Serbia) and the expected contribution of new branches in Bulgaria and Romania,» Alpha said. (Reuters)

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