9-month results 2003

RNS Number:8029R
Alpha Bank A.E.
07 November 2003


                                 PRESS RELEASE

                             9-MONTH 2003 RESULTS

                     EURO 190.8 MILLION IN PROFITS (+35.1%)

   UNDERPINNED BY SUSTAINABLE RETAIL BUSINESS EXPANSION AND COST CONTAINMENT


Our financial performance improves steadily. Strong revenue growth is driven by
our commitment to retail banking without compromising on our standards of
service excellence. We value our customers' loyalty and continuously strive to
present them with rewarding new and innovative products and services. Pursuing a
strategy of expanding our core business while strengthening operational
efficiency enhances significantly our corporate profile and profitability.



Yannis S. Costopoulos, Chairman and Managing Director





FINANCIAL SUMMARY



-          Net Interest Income increased by 16.1% to Euro 655 million.
          (nine-month 2002: Euro 564 million)

-          Net profit after tax and minorities up 35.1% to Euro 190.8 million
          (nine-month 2002: Euro 141.2 million)

-          Cost to income ratio further improved to 53.8% (nine-month 2002: 60%)

-          Return on equity up to 24% (nine-month 2002: 19.6%)





KEY HIGHLIGHTS



*         Growth in retail and commercial lending continues

Retail and SME lending grew by 38% and 15.7% respectively year-on-year, with
earnings before taxes in Retail and Commercial Banking Business Unit rising by
24.4% to Euro 171 million.



*         Cost containment programme strengthens profitability

Strong progress was achieved in branch restructuring and in the streamlining of
back and middle-office     processes. Restructuring in Greece and abroad
includes branch mergers and selected openings in key locations. Staff numbers to
decline by more than 6% in 2003 as the well-received early retirement scheme
announced earlier this year takes effect. Already, 90% of those participating in
the scheme have left the Bank. Total operating expenses rose only by 1.7%
against the same period last year, bringing us closer to our goal of zero
percent growth in total costs including non-loan provisions, between 2002 and
2005.



*         Prudent risk management policy

Provisions for bad and doubtful debts coverage reached 72% of non-performing
loans. The latter, amounted to 3.3% of total loans.



*         Placement of Treasury Stock complements a healthy capital position

The placement of Treasury Stock, during September 2003, was very well received
by international and local institutional investors, raising capital adequacy to
further facilitate the anticipated expansion of our core business. End-September
2003 Total and Tier I capital adequacy ratios stood at 12.6% and 9%
respectively.



*         New marketing initiatives at the consumer credit front

The renewal and expansion of our exclusive agreement with American Express
combined with the enhanced capacity of the network of EFT-POS terminals
(following a cooperation agreement with EFG Eurobank), prepares the ground for
new marketing initiatives, such as the Blue credit card and Centurion and
Platinum charge cards under the AMEX brand, improving customer service and
realising cost savings.





                                    TABLE 1

                      ALPHA BANK: 9 - MONTH 2003 RESULTS



                                                          On a consolidated basis

In Euro million                              2003       2002      A%        Q3         Q2       A%

Net interest income                         654.9      564.0     16.1%    229.9      214.9      7%

Non-interest Income                         323.9      299.7     8.1%     119.2      103.9     14.7%

Operational costs                           526.8      518.1     1.7%     177.4      177.3     0.1%

Provisions for doubtful loans               140.1      113.8     23.0%     48.5       46.3     4.7%

Net profit after tax and minorities         190.8      141.2     35.1%     72.5       58.2     24.6%





*         PROFITABILITY



In the nine-month period to September 2003, Alpha Bank net profit after tax and
minorities on a consolidated basis reached Euro 190.8 million, compared to Euro
141.2 million in the respective period of 2002, an increase of 35.1%.
Sustainable growth in retail and business lending, spread improvement and cost
containment are the main drivers of profitability in this period. Net profit
between Q2 and Q3 increased by 24.6% despite the weight of negative other
operating income (Euro-6.3million), reflecting mainly the cleaning-up of
accumulated negative investment portfolio valuations in Delta Singular, a
company consolidated with the equity method. The increase of Q3 trading gains is
largely due to profit taking from the Alpha Investments equity portfolio.





Income tax payments for the 9-month period to September 2003 do not reflect the
5 percentage points tax reduction benefit anticipated to arise from the
completion of the merger procedure with Alpha Investments, expected before
year-end, which will impact favorably on the full year 2003 results.





*         CORE INCOME



Core operating income (net interest and fee and commission income) during the
9-month period of 2003 increased by 11.8%, over the same period in 2002, mainly
due to the strong 16.1% increase in net interest income and the 2.2% increase in
fees and commissions.



The net interest margin for the 9-month period 2003 rose to 3% as compared to
2.6% for the corresponding period in 2002. On a quarterly basis, the net
interest margin in Q3 increased by 25 bps to 3.15%, accelerating vs. Q2 when it
had increased only by 5 bps to 2.90% from 2.85% in Q1, as the full impact of the
revised interest rate policy took effect in mid-June.



Fee and commission income for the nine-month period, adjusted for the
exceptional cost of the treasury shares placement, recorded a material
year-on-year increase of 2.2%, from Euro 213.0 million in 2002 to Euro 217.6
million in 2003, on account of improved capital market conditions especially
during the third quarter. Loan application fees remained subdued, as mortgage
growth decelerated from very high levels a year earlier. However, this reduced
growth rate was more than offset by the increase in commissions from third-party
capital market trading activity. The improving trend in commission income is
further confirmed at the quarterly level, where total commission income
(adjusted) recorded a 20.8% percent increase between Q2 and Q3 of 2003. It is
worth noting, in this respect, the rapid growth in fee and commission income
from credit cards (46.6%), mutual funds (22.2%), brokerage and investment
banking  (20.7%) and other bank charges (9.8%).





*         CUSTOMER FINANCING



Overall lending grew by 15.3% year-on-year, due mainly to the 38% increase in
retail lending (including mortgages and consumer credit) which now represent 27%
of our total loan portfolio (end - September 2002: 22.9%). Specifically,
mortgage lending rose by 44.5% while consumer lending and credit card
outstandings increased by about 20% each, leading to further gains in market
share. Already, our market share in retail lending has exceeded 13%, compared
with 9.6% at end-2001, mainly due to the rapid expansion in mortgage lending
where our market share is currently standing at 15%, compared with 7% in June
2001, when our retail policy changed. It is also worth noting, that during
recent months consumer credit has been expanding at a much faster rate than
previously and we anticipate further increasing our market share in this area,
which currently stands at 10%.



Lending to small and medium-size enterprises (SME) posted an annual increase of
15.7%, representing now 53% of our loan portfolio. During the last 12 months, we
have extended 12,000 new loans with rebates of interest payments applying to
borrowers with loans not in arrears, a programme that was met with great
success. Large corporate lending (including shipping) fell by 1.5%, on account
of a repayment of a sizable syndicated term-loan and the weakness of the US
dollar. Leasing and factoring volumes grew by more than 6% and 34% respectively,
representing more than 5% of the loan book.



*         CREDIT QUALITY



We continue to attach top priority to maintaining sound credit quality to ensure
sustainable and profitable growth. Non-performing loans (defined as loans in
arrears for more than 90 days), reached 3.3% of total lending (NPL ratio). Bad
debts at end-September 2003 represented only 0.31% of total lending. Provisions,
which are formed every year at the tax efficient rate of 1% of average total
loans, amounted to Euro 473.4 million for the nine-month 2003 period,
representing 2.4% of total loans and 72% of NPLs (coverage ratio). Continuous
sectoral monitoring of NPLs indicates that the Bank is more than adequately
provisioned.



*         DEPOSITS AND CUSTOMER ASSETS UNDER MANAGEMENT



Customer deposits and assets under management (including deposits, repos, bonds,
mutual funds, private banking etc.) recorded an increase of 1.2% to Euro 31.6
billion at end-September 2003 from Euro 31.2 billion a year earlier. The outflow
of funds from repos (-45.4%) was more than compensated for by the substantial
growth of, among others, Alpha Bank bond sales placed with retail customers
(+Euro 959 million since May 2003), money market mutual funds (+65.4%) and
portfolio management accounts (+65.2%) -mainly through Alpha Private Banking- as
customer funds shift from deposit based products towards investment based
products. Finally, it is noted, that the traditional sight and saving deposits
increased at the end of September 2003 on an annual basis by 6.4% and 7.7%
respectively, reflecting the strong growth of our funds' stable deposit base.



*         COST CONTROL



Implementation of tight cost controls has been very successful in containing
expenses growth, including amortisation and other (non-loan) provisions, to 0.2%
on an annual basis. Staff costs rose marginally by 0.3% while general expenses
increased by only 1.4%, despite an increase of 23.8% in advertising spending and
a 14.3% increase in IT-related expenses. In addition, cost control measures
applied in subsidiaries led to a drop in their general expenses of 11.2%
year-on-year as well. Furthermore, on a cost-to-income basis, there was a
noticeable improvement to 53.8%, from 60.0%. This is largely due to our
well-controlled cost base, a function of staff reductions and branch
consolidation. More specifically:



i.                Branch network rationalisation continues, with the conclusion
of the merger process in 38 locations and at the same time the opening of 11 new
Branches in Greece and abroad since the beginning of 2003. Moreover, staff
numbers have been significantly reduced since the beginning of the year, by 357
at Bank level and by 399 at Group level on a net basis. These departures reflect
the ongoing implementation of the 2003 early retirement programme through which
a total of 470 employees are expected to leave during this year.



ii.              Cost control measures are expected to yield additional results
in the months ahead, following various initiatives. Projects already implemented
include: the centralization of Swift systems of the subsidiaries abroad, the
consolidation of homogeneous units such as correspondent banking, the transfer
of the Main Branch's operations to the Branch Support Centre I and so on.
Ongoing projects concentrate on the following areas: payment systems and
development of further Cash Management services capability, accounting processes
and systems re-engineering, consolidation of cheque processing imaging-based,
Trade processing Centre, L/G processing Centre, common technology platform and
support for subsidiaries abroad, Straight Through Processing (STP),
e-procurement and so on.



*         CONTINUING MARKETING INITIATIVES IN RETAIL AND SME BANKING



Customer segmentation strategies applied with success



Alpha Bank has remained focused on retail and SME banking business, as the
promotion of our newly introduced innovative marketing initiatives, namely Alpha
1I2I3 Youth Line, Pentathlon and Epathlon, continued in the third quarter of
2003, already showing impressive results. More specifically, since May 2003,
16,000 Alpha 1I2I3 accounts have been opened, the bulk of which (over 65%) for
the benefit of the younger segment of the target group (under the age of 14).
With respect to the Pentathlon loyalty reward scheme (a programme aimed at
raising the number of core banking products bought by small businesses and
professionals, to a target of five), since July 2003, we have attracted more
than 1,000 applications, corresponding to more than 2,000 products in total, of
which, more than 45% relates to customer financing. Finally, since June 2003, we
have issued more than 50,000 new VISA cards under Epathlon, the largest
multi-retailer customer loyalty scheme for individuals to date, which we
co-manage together with the telecommunications operators and fellow Grand
Olympic Sponsors OTE and Cosmote.



Renewal of Alpha Bank and American Express co-operation agreement



Alpha Bank and American Express have agreed to renew and extend their
co-operation on the issuance of Amex cards in Greece for the next five years.
According to the cooperation agreement, Alpha Bank will continue to hold
exclusive issuance rights for an extended range of Amex credit and charge cards,
which will see Alpha Bank being one of the first banks in Europe to launch a
number of innovative American Express products, like the Blue card, a credit
card marketed for the wider public. Other American Express products that Alpha
Bank will launch include charge cards Platinum and Centurion, for the affluent
market, coupled with widely-recognised membership reward schemes of Amex, which
confer substantial benefits to the cardholders. Furthermore, the corporate
American Express card will be issued in an international edition, acknowledged
as the top choice of all large corporations worldwide.



New integrated network of electronic terminals (POS) to support the card
acquiring business



During September 2003, Alpha Bank and EFG Eurobank Ergasias, signed a
preliminary co-operation agreement in order to develop a new integrated network
of electronic terminals (POS). The new network aimed at supporting transactions
carried out with VISA, MASTERCARD, AMERICAN EXPRESS and EUROLINE cards, will
have national coverage and incorporate advanced technologies. In addition, it
will help to further expand the acquiring business, allowing the electronic use
of credit cards with increased security and speed. The new network is expected
to yield economies of scale with immediate effect on transaction processing
costs. Currently, retailers in Greece use separate POS terminals for different
card issuers and/or different types of cards. The new network will simplify and
encourage wider credit card acceptance for the two parties across the market.



Panorama of Olympic Sports marketing programme



Finally, the Panorama of Olympic Sports marketing programme, is on a tour for
the third consecutive year, in a large number of Greek cities with the two-fold
aim to increase public awareness of the least known Olympic Sports and raising
the profile and understanding of Alpha Bank and its products and services. Since
May 2003, 24 events have been staged in various cities during which more than
80,000 Epathlon cards and more than 8,000 Alpha 1I2I3 accounts sales leads were
generated.



Alpha Bank as the Official Bank and Sponsor of the Athens 2004 Olympic Games



As the Official Bank and Sponsor of the Athens 2004 Olympic Games, Alpha Bank is
already expediently exploiting the rights of use of the Olympic Games logo and
this is actually intensifying as we get closer to the Games. Alpha Bank's name
association with this event of great national importance, strengthens our
relationship with clients as well as others that are in various ways related to
the implementation of the Games. This leads to revenue enhancement arising from
the expansion of our banking operations as well as the development of our credit
card business, the issuing of tickets for the Olympic Games, the participation
in the home rental programme for visitor accommodation etc. The biggest
advantage, however, to derive from the Sponsorship remains the expansion on a
permanent basis of our client base and our business activities, which will
continue to support our profitability even after the conclusion of the 2004
Athens Olympics.





Athens, November 7, 2003






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