Alpha Services and Holdings S.A.

Ladies and gentlemen, thank you for standing by. I am Yoda Yokoro's call operator. Welcome and thank you for joining the Alphabank conference call to present and discuss the nine-month 2025 financial results. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Alfa Bank management. Gentlemen, you may now proceed.

Hello, everyone, and welcome to the presentation of our third quarter results. I'm Iasson Kepapsovlu, Alfa Bank's Head of Investor Relations. Our CEO, Vassilis Psaltis, will lead the call with a usual summary and a few updates. Our CFO, Vassilis Kosmas, will then go through this quarter's numbers in some detail. 20 will come at the end, and we should wrap up within the hour. Vasilis, over to you.

Good morning, everyone, and thank you for joining our call. Let's start with the usual overview of financial results on slide four, please. As you can see, reported profits for the nine months stood at $704 million, already more than what we have made in the preceding fiscal years. Earnings per share of 27 cents are 73% of the target we have set for the year. This translates into a 13.9% normalized return on tangible equity. We've also accrued $352 million for distribution so far this year, already more than the distributions out of 2024 profits, and we intend to distribute circa $111 million as an interim cash dividend in about a month's time. The main pillars of our performance remain the same. We have defended against the fall of the interest rates, seeing the second quarter of sequential NII growth. We recognize that the decline in interest rates will come less relevant in the coming quarters, but our ability to prudently position the balance sheet to maximize the value we can extract will remain relevant, be it on policy rates or spreads. We see structural tailwinds to our fee income line coming from asset and wealth management alongside lending and transaction banking. Fee income growth is the product of the initiatives we have taken that are now bearing fruit, both on the corporate as well as the affluent side of the business. We continue to position the business to maximize the recurring value we can create for our stakeholders in a sustainable way. Now, allow me to spend some time on the strategic outlook. starting with slide five. Our strategic partnership with Unicredit continues to be a cornerstone of our transformation and growth agenda. As of last week, Unicredit has increased its stake in Alphabank to circa 30%, reinforcing the depth and commitment of our partnership. This is not just a financial investment. As Unicredit CEO, Andrea Orsel, has repeatedly stated, it's a strategic partnership delivering tangible, commercial, operational, and systemic benefits for both institutions. We've cooperated closely and successfully combined our Romanian subsidiaries in a record timeframe, creating a stronger regional footprint and unlocking synergies in cross-border operations. Furthermore, our clients now benefit from Unicredit on European network across 13 countries. This uniquely positions Alphabank as a gateway to Europe and the bank of choice for over 5,000 wholesale clients in Greece. In wealth and asset management, the launch and expansion of the OneMarket fund suite has been a major success with close to 900 million distributed to our customers. In wholesale banking, we have collected over 300 million in letters of credit and guarantees throughout transaction banking business and approved circa half a billion in international syndicated lending since the partnership began. Initially, bilateral FX payment volumes have reached 650 million year-to-date, reflecting strong transactional momentum. In capital markets and advisory, the integration of our investment banking platform is progressing well. Together with Unicredit's advisory franchise, we're targeting joint-deal origination across various sectors. Lastly, beyond commercial gains, we are also leveraging Unicredit's expertise in customer experience, process simplification, upskilling and reskilling programs, compliance, and operational resilience, areas that are crucial to our long-term sustainability. This partnership aligns with Europe's vision for cross-border integration and financial stability. It supports the capital market union and enhances systemic resilience across Europe. Looking ahead, we aim to scale further our syndicated lending, transaction banking, and cross-border advisory, and broaden the distribution of asset management products across Unicredit's network. Our partnership with Unicredit gives us a competitive advantage that differentiates us from the rest of the pack, one that we aim to fully utilize to enhance the value that we can create for the benefit of all of our stakeholders. Our story remains intact, as you can see on slide six. Our strategic actions, alongside our balance sheet tactical positioning, will allow us to maintain an upward trajectory to our bottom line. Our defensive net interest income profile is now evident, as we are amongst the first commercial banks in Europe to see growth in their net interest income line. We continue to dynamically manage our balance sheet, capturing the tailwinds of long growth. The structural growth potential of the regions where we operate will allow us to maintain a pace of net credit expansion above the 2 billion mark. We are stepping up our efforts for incremental fee income generation. Our franchise is strongly positioned to benefit from the long-term uplift in the penetration of fee-generating services. And as mentioned above, we are leveraging the partnership with Unicredit to accrue tangible benefits quarter after quarter. Our profitability is thus on an upward path and we see earnings growing by 12% beyond 2025, still notwithstanding the impact of any share buybacks. Let's now move to slide seven, please. The trends for 2025 and beyond allow us to maintain a differentiating positive EPS growth trajectory in the medium term. This differentiation should now be apparent vis-a-vis our domestic and European peers. EPS is expected to grow by 10% per annum over the planning period, above consensus estimates, even before accounting for the effect of any buybacks. And then on slide eight, please. We have been diligent and clear on how we intend to allocate capital, and our hierarchy remains unchanged. Our first and foremost priority is to fund profitable loan growth and invest in bolstering our capabilities. Our capital generation capacity suggests that we ought to be increasing payout. Lastly, our excess capital provides us with significant firepower to do more. Allow me to provide you with an update on these priorities, starting with loan growth on slide nine. Loan growth in Greece continued to show resilience, with corporate lending continued to lead the way. We are seeing sustained momentum driven by a combination of strong economic fundamentals, a robust investment cycle, and the structural support mechanism in place. Businesses are actively engaging with the banking sector to finance expansion, transformation, and innovation. reflecting a deeper shift in the corporate landscape. We expect this dynamic to persist, fueling high single-digit growth for corporates. The mortgage market presents a more complex picture. Demand is evident, but structural constraints around supply and legacy portfolio dynamics continue to weigh on growth. Government support measures offer some relief, and growth is now turning positive. As a result, lending to individuals will be a growth area in the coming years. We're operating in an environment of hate and competition, particularly in the large corporate segment, which has led to gradual compression and spreads. We're actively defending profitability through prudent underwriting, optimizing risk-weighted assets, and increasing fee and commission income. The commercial book remains resilient, and we are confident in our ability to navigate these dynamics effectively. Overall, the outlook remains constructive. corporate lending will continue to be the engine of growth, supported by a recovering economy and targeted investment flows. Whilst mortgage activity may be slow in picking up, the broader loan book is well positioned to deliver on our expectations. We remain confident in our guidance and continue to expect mid to high single-digit growth over the medium term. On slide 10, you can see the revenue benefits from the investments we have made in growing parts of our core business. Beyond balance sheet growth, we have made important strides in diversifying our revenue streams and enhancing our cross-selling capabilities, which is a key pillar of our medium-term growth strategy. Trade finance and overall transaction banking fees have seen strong growth, achieving an 8% CAGR boosted by our internal efforts to deepen our share of wallet with clients and also thanks to our partnership with New Credit and the larger product palette that they are now able to offer us to our corporate customers. In asset management, fees and assets under management have both doubled since December 2022, with over 60% of this growth coming from net new money, complemented by positive market effect. The former highlights our growing distribution capabilities, capitalizing on our affluent and wealthy clientele, whilst the latter demonstrates the outperformance of our products. Mutual funds have taken the lion's share of this growth, with net sales accounting for 75% of the total growth and a continuing bias towards balance and equity funds. These are products that carry higher management fee margins, helping our fee category and asset management reach an impressive 32% since the first quarter of 23. The outlook for these two areas remains very constructive. Our corporate customers, they are increasingly more sophisticated, and their needs are expanding beyond plain vanilla lending. As such, we aim to support them in their growth journey through an expanded palette of transaction banking, trade finance, treasury, and advisory product, the latter with our new, larger business following the acquisition of Axia Ventures. In asset management, Greece is at early stages of a new secular trend. with rising disposable incomes and improving financial literacy among affluent customers, creating long-term tailwinds for AUM growth. Moving on to slide 11. Shareholder remuneration has been on a consistent upward trajectory, reflecting both our strong capital generation capacity and our commitment to sustainable value creation. We reiterated dividends with it, We started again paying dividends with a 20% payout ratio, increased this to 43% of reported profits last year, and we are currently accruing at 50% for 2025. This progression underscores our confidence in the robustness of our capital position and our ability to support higher distributions going forward. Indeed, our capital generation capacity suggests that the payout north of 50% is sustainable, aligning with our strategic objective to deliver predictable and growing returns to our shareholders. Ash dividends have followed a similar upward path, starting with $61 million out of 2023 profits and rising to $70 million for 2024. For the current year, the introduction of an interim dividend of $111 million to be paid in the fourth quarter confirms the positive momentum in our disciplined approach to capital deployments. Now, when it comes to the split between cash dividends and share buybacks, our approach remains balanced and responsive to market conditions. While cash dividends provide immediate and tangible returns, buybacks offer flexibility and accretive value, particularly in periods of market dislocation. We continue to assess the optimal mix guided by our capital planning framework and our overarching goal of enhancing total shareholder return cognizant of the change in the return of investment or future buybacks. Let's now move to M&A and start with slide 12, please. We view M&A as a powerful tool that can accelerate the delivery of our strategy. The three transactions we announced earlier this year, FlexFin, Astro Bank, and Axia Ventures, they are fully aligned with our framework. FlexFin enhances our factoring capabilities and opens access underserved SME segments. Astrobank consolidates our systemic presence in Cyprus, doubling its profitability. Axia Ventures strengthens our advisory offering, elevating our dialogue with corporate clients with additional focus on cross-border capabilities in conjunction with our unit credit partnership. Moving on to slide 13. As we have stated clearly, The financial impact of these transactions with a total 6% accretion to EPS and 60 basis points benefit to profitability in terms of return on time of equity at the cost of circa 60 basis points of capital. Integration efforts are already underway and we're working to work full rollout in line with our strategic roadmap. To ensure seamless execution, we have appointed a dedicated chief of integration and group initiatives officer who oversees all aspects of delivery and sits on the executive committee. This governance structure ensures strategic alignment, operational discipline, and timely execution. We will continue to pursue opportunities that fit our framework and deliver long-term value to our clients and shareholders. And then finally, from my side, I'm pleased to announce that we are planning to host an investor day in the second quarter of 2026. We're close to the end of the period covered by our last event, held in June 2023, so we believe it is time to update the market on the progress we have made across the group and explain our strategic priorities going forward. Planning is already underway, and we will be sharing more details in the coming months. At the four-year result stage, you should expect to receive guidance for 2026, but with a three-year business plan subsequently unveiled during the investor day. And with that, Vasile, the floor is yours.