Alpha Bank beat market expectations with strong profit growth in the first quarter and said robust consumer lending would help the bank, Greece’s second-largest by assets, to meet future targets. Group earnings were up 49.6 percent at 150.7 million euros ($194 million), the bank announced yesterday, against an average forecast of 136.5 million in a Reuters poll of analysts. «The start of 2006 was a period of intense competition,» the group’s chairman, Yiannis Costopoulos, said in a statement. «In all areas of operations, especially in Greece in retail banking and in Southeast Europe where we continue to grow profitably, progress has been substantial.» Like other Greek lenders, Alpha has steadily expanded into the Balkans – Bulgaria, Romania, Serbia, Albania – buying local banks and setting up branches to secure new areas of growth before expansion at home peaks. It was the third major Greek bank to report healthy earnings in the first quarter, indicating that last year’s boom in household lending was still going strong. «Alpha’s results look good, beating our and consensus estimates nearly in all lines. Our overall impression is positive and we underline that spreads seem little changed versus the last quarter of 2005,» said analyst Costas Sinanidis at Marfin Analysis. (Despite the good result, Alpha’s stocks were caught up in the uproar caused by US inflation and higher interest rate fears. They closed down 0.84 percent, at 21.16 euros.) The group’s net interest income climbed 22.2 percent to 342.6 million euros in the first quarter, at the top end of forecasts. Analysts were expecting 335 million euros on average. Consumer credit growth Its net interest margin was stable at 3.1 percent, with spreads helped by the bank’s increasing exposure to higher-yielding consumer credit. «We had a very good quarter despite competition which led to a slight spread containment. We didn’t experience any substantial compression, countering competition with service quality and innovative products,» chief financial officer Marinos Yiannopoulos told Reuters. He said net interest margins were likely to move gradually lower. But they also depended on how aggressive a bank gets in terms of pricing to expand its business. Alpha increased its total loans by 20.6 percent year-on-year to 29.2 billion euros, largely due to strong lending to households which exceeded market growth rates, producing a gain in market share. Credit expansion was 20.4 percent in Greece and 27.3 percent in Southeast Europe. Mortgages were still expanding strongly after last year’s boom, up 34.2 percent year-on-year in the first quarter, with consumer loans rising 37.6 percent. With a market value of 8.6 billion euros, Alpha trades at 14.5 times expected 2006 earnings, a small discount to the average multiple of 16 for European banks, Reuters Estimates show. Alpha has said it was aiming for 20 percent annual earnings per share (EPS) growth on average for 2006-08. «(It’s) a target we continue to feel confident we can achieve,» Yiannopoulos said. The group’s return on equity (ROE) improved to 26.7 percent from 19.8 percent in the same period a year earlier. The cost-to-income ratio came down to 45.1 percent from 50.1 percent, with operating expenses driven mainly by its business in Southeast Europe. With Turkey in focus as a new expansion area for Greek banks, especially after recent acquisitions there by National Bank and EFG Eurobank, Yiannopoulos said Greece’s eastern neighbor was also on the group’s radar screen. «We are looking at Turkey but not as a core business. We want to see if there are opportunities for a presence there. Our expansion strategy abroad is to grow organically,» he added.