Alpha Bank bets heavily on Balkan growth, consumer and mortgage credit

The new three-year business plan for Alpha Bank to be presented next week will emphasize two main points: more than doubling its branch network in Southeastern Europe and dynamically repositioning itself in the retail sector. The group wants to strengthen the bank’s position in the Balkans rapidly through autonomous expansion of the network. The possibility of buyouts has not been ruled out, although the intense interest by major European banks and the steep rise in the valuations of banks on sale are leading Alpha toward autonomous development. By the end of 2008, the bank wants to see its Southeastern Europe network exceed 400 branches from 180 today. Alpha seeks to secure a combined market share of 5 percent abroad, ultimately growing to 10 percent. Today its share is at 9 percent in Cyprus, 5 percent in Romania and Serbia and at 1 percent in Bulgaria. In the domestic market its share is at 19 percent. The second strategic priority of the Alpha Bank group is to bolster its position in consumer and mortgage credit. A few months ago the bank’s sales policy turned more aggressive and it is now bearing fruit: In the first nine months of 2005 consumer and mortgage credit spearheaded the bank’s advance, recording an annual rise of 46.4 percent and 35.8 percent respectively – figures considerably higher than the market average. Alpha intends to radically change the mix of its loans portfolio by diminishing corporate loans in favor of retail banking. At end-2004, loans to companies represented 55 percent of all loans. The target for the next three years is limiting corporate loans to 35 percent of the total, according to an estimate by Citigroup, which has also revised the target price for Alpha’s stock from 28 euros to 31 euros. Citigroup analysts have a «buy» recommendation for Alpha’s stock, ranking it among medium-risk investments.

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