Credit rating agency Fitch yesterday downgraded its long-term rating outlook for Alpha Bank to «negative» from «stable» following concerns about the bank’s profitability and falling capitalization. It also warned of a possible negative individual rating in the event the bank’s performance continues to deteriorate. Alpha Bank, the largest privately owned bank in Greece, currently has an individual rating of «C.» Fitch said the downgrading reflected its concerns «about increased pressure on Alpha Bank’s underlying profitability and weakening capitalization.» With Greek banks focusing on the retail market, the intensifying competition could soon put pressure on margins, the rating agency said. Greece’s five largest banks, National, Commercial, Alpha, EFG Eurobank and Piraeus, reported a quarter-on-quarter increase of 4.6 percent in net interest income in the first half of the year. However, the banks also saw consumer credit growth slowing down. According to Manos Giakoumis of P&K Research, consumer loans are expected to decline further, partly offsetting a projected moderate increase in net interest income in the second half of the year. Unlike the other four major banks, Alpha Bank showed a small drop in net interest income in the first half, despite a moderate increase quarter-on-quarter in the second quarter. Profitability aside, Alpha Bank has seen its capitalization decline as a result of the stock market slump, Fitch noted. «Alpha Bank has been more affected by the fall in share prices than most of its domestic peers,» the agency said, citing the significant dent in the bank’s profitability as a result of writedowns on its equity investment portfolio. In the first half of the year, the bank said its trading income plunged by 55 percent year-on-year while in the second quarter, the fall was a hefty 660 percent quarter-on-quarter. Alpha’s capitalization is also coming under pressure from strong loan growth even as its capital ratios remain low, Fitch said. Good will associated with recent acquisitions has in addition taken its toll on its absolute capital levels. Fitch said it was essential that Alpha monitor its costs. It warned a weak performance could lead to a negative individual rating.