Alpha Bank yesterday became the second financial institution after National Bank to announce interest rate cuts in both savings and lending in a move designed to bolster disappointing net interest income. Of the five major banks in the country, National and Alpha banks surprised the market with an unexpected fall in net interest income in the first quarter of the year. National Bank saw its first-quarter net interest income drop by 3.1 percent in the face of higher funding costs and lower income from fixed-income securities. Hit by the same factors, Alpha Bank’s net interest income showed a 4.3-percent decline. The two banks’ dismal performance in this sector contrasted with the strong growth posted by their smaller competitors, EFG Eurobank Ergasias, Commercial Bank and Piraeus Bank. Analysts said it was therefore not surprising that National and Alpha resorted to interest rate cuts in order to boost net interest income in the second half of the year. Cutting savings rates should boost the banks’ profits, said Schroder Salomon Smith Barney economist Miranda Xafa, a move also necessitated by declining trading revenues. Manos Giakoumis, banking analyst at P&K Securities, said trimming interest rates will «clearly help» the bottom line. He said a rough and arbitrary calculation showed the rate cut could benefit Alpha Bank to the tune of some 30 million euros, equivalent to 4 percent of net interest income. The country’s largest private bank slashed 25 basis points off the majority of interest rates for savings deposits in the Alpha 100, Alpha 400 and Alpha 410 series. Accounts with less than 3,000 euros in the Alpha 100 category will receive an interest rate of 0.5 percent, down from 1.25 percent. In corporate lending, the interest rate cut will affect loans for working and fixed capital, overdrafts and working capital without any time limit, reduced to 3.25 percent from 3.5 percent. Interest rates for loans to acquire shareholdings and overdrafts in the Alpha 100 series will fall by 25 basis points to 9.25 percent. The new rates come into effect June 3. Giakoumis said other banks are likely to adopt a «wait-and-see» attitude before taking any action. Because of strong growth in first-quarter net interest income, they have the luxury of keeping their rates unchanged.