Alpha Bank Sa

Ladies and gentlemen, thank you for standing by. I am Jota, your Chorus Call Operator. Welcome and thank you for joining the Alpha Services and Holdings Conference Call to present and discuss the nine-month 2024 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 Alpha Services and Holdings Management. Gentlemen, you may now proceed.

Good morning, everyone. Thank you for joining us. I am Iasson Kepapsoglou, Alpha Bank's head of IR. Vassilis Psaltis, our CEO, will lead the call today, summarizing our progress and giving you a few highlights. And then Vasilis Kosmas, our CFO, will give you more details on the quarter and the guidance. As ever, the whole team is here and we will take Q&A in the end and should finish within the hour. Vasilis, over to you.

Well, thank you, Eson, and good morning from my side as well. Thank you for joining. Let's dive in, starting now with slide number four, please. With one quarter left until the end of the year, we have delivered recurring earnings of $666 million, which translated into a 14.4% return on tangible equity and $0.26 of earnings per share for our shareholders. Our top line is resilient, with net interest income remaining strong whilst we continue making good progress in free income generation, supporting our solid management of operating leverage, and ensuring an improvement in provisions. We continue to grow our loan book and customer funds and to position the business to maximize the recurring value we can create for our shareholders in a sustainable way. Our capital buffers continue to grow steadily with 131 basis points of capital generation, reaching a level of 16.5% in the third quarter, including the impact from deconsolidating off of Romania. but that number goes up to 17.1% when accounting for the completion of other pending transactions. Please bear in mind that these numbers are net over 35% accrual for dividends out of 2024 profits, and this is up from the 20% accrual of 2023. It is important to note that we are also well ahead of the final binding emerald requirements. Given the marked progress we have made in the first nine months of the year, as you will later hear from our CFO Vasilis, we are upgrading guidance for the year. Relative to the most recent upgrade we made in August with our second quarter results, today's upgrade relates mainly to three things. Firstly, better net interest income. Secondly, lower provisioning expenses. And thirdly, stronger risk-weighted asset optimization. The combined output has allowed us to deliver higher recurring earnings, higher profitability, and a lower NPE ratio, whilst increasing our guidance for tangible book value and regulatory capital. But I think it is also worth highlighting that within the space of three quarters and versus the business plan we announced at the start of the year, we have been able to upsize our long-growth ambition We're delivering already this year the 2026 NPE targets, and we are five quarters ahead of plan in terms of capital and embryo, all whilst upsizing our ambition for earnings generation. Now, let's move on to slide five, please. There you can see that we have been and will continue to deliver a positive trajectory in earnings and capital. Here is a summary of the unique characteristics we possess and our strategic positioning that underpins our confidence in delivering in this promise of earnings growth and strong capital generation. Unlike many of our peers in Europe, we strongly believe we can continue to grow earnings, grow capital, and increase shareholder remuneration despite the interest rate headwinds. On this slide, you can see a summary of our unique characteristics that underpin this differentiated positioning. Let's look now at each in turn, starting on slide six. We have been diligent in ensuring that we manage our balance sheet dynamically with a view to maximize long-term value creation. At this juncture, this has meant ensuring that we were well positioned for the impeding decline in interest rates. Here, we're giving you full disclosure on the composition of our balance sheet, including the effect of hedging we have done, and our sensitivity to interest rates, assuming full repricing on a static balance. In absolute terms, we have a lower amount of core deposits versus sub-PS, we have a higher share of hedges, and have a lower net floating position of $4.7 billion. As you can see, at 12 million for every 25 basis points, this is at the lower end of the range for commercial European banks. Obviously, rates are not the only thing affecting our top line, and we expect a positive contribution from loan growth, reinvestments in our security book, and lower home funding costs, now that incremental funding issuance is less of a headwind. As Vasilis will explain later, we expect that our net interest income will be relatively resilient going forward. Growth in net interest income is largely predicated on loan growth, which is currently mostly driven by growth in corporate loans. And as you can see on slide seven, we have been able to move effectively in tandem with our peers over the medium term, slightly gaining market share. This quarter, we have seen very strong levels of growth, and we expect this trend to carry to the end of the year, beating our previous guidance for the year. As we have witnessed, Corporate loan growth then tends to be bumpy, given the long incubation period for investment loans to materialize, and this will create volatility in performance, but we expect to sustain good, strong momentum into 2025. What is more, we have been able to accomplish this growth whilst ensuring that we are diligent in our underwriting principles. We have seen spread pressure in the market, which comes as a function of lower funding costs, better visibility on the outlook, and improving credit rating of our clients. However, we continue to price risk adequately, and we have worked hard to ensure that we optimize capital consumption to ensure disbursements meet our profitability thresholds. Moving now to slide eight, our resilient top line is coupled with solid progress on fee income as we continue to lead in the asset management space and are making good progress in all other areas. There is significant room to grow in bank assurance, as well as in the payments and lending space. The 2026 number on this page is based on the business plan we announced with full year results back in March. We are planning to upgrade our ambition in the new planning cycle to reflect our fair share of wallet in certain segments, as well as new initiatives. Our partnership with Unicredit is providing tangible benefits for our customer, reinforcing our franchise, as you can see on slide 9. Earlier this week, we announced the closing of the transaction in Romania. Our private banking and affluent customers have already bought 150 million worth of funds from Unicredit's OneMarket, which is an offering that we have since our soft launch in July, while the official launch occurred in October. The joint venture in Banca's runs is expected to close in the first half of 2025, but we are already working closely with Unicredit in manufacturing Uniclin product with an AI-themed offering already launched in October. Our wholesale offering is also benefiting from our partnership, as we are already participating in relevant syndications. In addition, we are expanding our collaboration in trade finance guarantees and letter of credit, in clearing, in trading, treasury, factoring, as well as brokerage. We have also begun to pitch jointly for certain DCM deals and have done our inaugural deal on a big corporate as joint book runners. Our partnership with Unicredit gives us the opportunity to drive innovation in the grid market, to be exposed to international competition, and to put ourselves at the forefront of the European banking developments as a member of an extensive pan-European network. This is an opportunity that differentiates us from the rest of the pack, and we will fully utilize it to enhance the value that we create for the benefit of our shareholders. Turning now to slide 10. Other than 2024 that Vassilis will discuss shortly, we are not providing a detailed update to guidance today. This will come with our full year results. But allow me to reaffirm our commitment to growing our bottom line in the coming years. Our conviction is built upon the structural advantages I just discussed. Our top line is resilient as a lower sensitivity to falling interest rate is combined with specific tailwinds from loan growth, securities reinvestment and lower funding costs. We are making sure that we are growing our loan book profitably and are diversifying our revenue streams by expanding our fee generation capabilities. Growing earnings and improving profitability is not an easy feat given the headwinds we expect from falling interest rates. But as I have explained already, a lot of work has already been done to give us the confidence in our ability to deliver on these promises. Slide 11. Improving earnings and profitability will translate into strong capital generation. We have a solid starting point on this, both in terms of regulatory capital as well as in terms of MREL, which means we have less headwinds from incremental issuance as we have already optimized the capital stack. Comfortable buffers against regulatory capital and MREL and the penal plan distributions. Subject to regulatory approval, we expect to distribute more than 30% of the current market cap in dividends, and at the end of the period, still have more than 40% of the current market cap in excess of the capital that we need versus our management targets. The forward achievement of a 17.1 core equity tier one ratio, which stands strongly not just in a Greek, but also in a European context. The fact that we have comfortable emerald buffers The sustainable above 40% return on tangible equity, organic profitability, and the decisive dealing with the last small tail of NPEs to achieve our target to have our ratio diving under 4% means we are comfortable and confident about this year target for dividends and also increase our ability to beat the target of a cumulative over three year payout of 1.1 billion to our shareholders. Slide 12. I hope that all the above further explain why we feel so strongly about the buyback we have initiated back in August. We expect to have superior earnings growth in the coming years that will lead to significant capital generation. And now, from one Vasilis to the other, Vasilis, the floor is yours.