Earnings call transcript: Alfa Bank Q4 2024 reports 9% EPS growth

Alfa Bank, currently trading near its 52-week high with a market capitalization of $4.5 billion, has reported its financial performance for the full year 2024, showcasing a robust 9% growth in earnings per share (EPS) to $0.35. According to InvestingPro analysis, the bank appears slightly undervalued based on its Fair Value metrics. The bank also highlighted significant achievements in digital transformation and strategic acquisitions aimed at strengthening its market position.

Key Takeaways

• Alfa Bank’s EPS increased by 9% year-on-year, reaching $0.35.
• The bank is enhancing its digital capabilities and expanding its wealth management platform.
• Strategic acquisitions, including Flexfin and Astrobank’s assets, are set to bolster SME services and market presence.

Company Performance

Alfa Bank demonstrated strong financial performance in 2024, with normalized profits rising by 9.4% to CHF 861 million. Trading at a P/E ratio of 7.78 and maintaining a GOOD Financial Health Score according to InvestingPro, the bank’s strategic focus on digitalization and market expansion has positioned it well against industry trends. The acquisition of Flexfin and the agreement to acquire Astrobank’s assets in Cyprus are expected to enhance its services for small and medium-sized enterprises (SMEs). For deeper insights into Alfa Bank’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Full Year 2024 Reported Profits: CHF 654 million
• Normalized Profits: Up 9.4% to CHF 861 million
• Earnings Per Share (EPS): $0.35, 9% annual growth
• Return on Tangible Equity: 14%
• Capital Ratio: 16.3%
• Proposed Distribution: CHF 281 million (43% of profits)
• 75% of distribution (CHF 210 million) allocated to buyback

Outlook & Guidance

Alfa Bank is projecting loan growth of €2 billion in 2025, with expectations for net interest income to stabilize. Fee income is anticipated to grow by 13% in the coming year. The bank is targeting an EPS growth rate of 6% annually, focusing on organic growth, shareholder returns, and strategic mergers and acquisitions.

Executive Commentary

Vasily Psartis, CEO of Alfa Bank, expressed confidence in the bank’s sustainable earnings trajectory, stating, "Our earnings are sustainable and should be on an upwards trajectory." He also emphasized the bank’s superior earnings growth potential, saying, "We expect to have superior earnings growth in the coming years, above market estimates."

Risks and Challenges

• Economic Uncertainty: Potential macroeconomic pressures could impact growth projections.
• Regulatory Changes: Compliance with evolving regulations may pose challenges.
• Competition: Intense competition in the banking sector could affect market share.
• Technological Disruptions: Rapid technological advancements may require continuous adaptation.

Q&A

During the earnings call, analysts inquired about Alfa Bank’s M&A strategy and its partnership with UniCredit. The bank reiterated its commitment to strict financial criteria in M&A activities and highlighted the partnership’s role in supporting loan growth and market share expansion in retail and SME segments.

Full transcript - Alpha Bank (AT:ACBr) SA (ACBB) Q4 2024:

Mina, Conference Call Operator, Chorus Call: Ladies and gentlemen, thank you for standing by. I am Mina, your Chorus Call operator. Welcome and thank you for joining the Alpha Services and Holdings Conference Call to present and discuss the full year 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.

At this time, I would like to turn the conference over to Arfel Services and Holdings Management. Gentlemen, you may now proceed.

Iason Kipaksooglou, Head of Investor Relations, Alfa Bank: Good morning, everyone. Thank you for joining us. I am Iason Kipaksooglou, Alfa Bank’s Head of IR, where the full year states, so the two items on the agenda are the results for the year and the plan for the future. We’ll tackle them in that order, switching between Vasily Psartis, our CEO and Vasily Psratis, our CFO, as needed and you get to guess who’s who. However, the whole team is here and we will take your name in the end.

And with that, over to our CEO, Vasily. The floor is yours.

Vasily Psartis, CEO, Alfa Bank: Thank you, Jasson. Good morning also from my side and thank you for joining. A lot to cover indeed, so let’s dive in starting with Slide four please. 2024, Fresenas make marked progress towards our business plan objectives. We have delivered $0.35 of EPS with 9% annual growth in normalized profits, translating into a 14% return on tangible equity, while our capital ratio has climbed to 16.3%.

Our reported profits reached CHF654 million and we have accrued 43% on that. That means CHF281 million or CHF0.12 per share for distributions and this is subject as always to regulatory approval. We will propose to use 75% or CHF210 million for a buyback, reflecting the views of our shareholders on the superior return of buyback generated given that what currently the stock is trading. Those of you that have been following us for a while will remember that we identified several strategic priorities at our Investor Day in 2023. On Slide five, you can see that we have been making solid progress on these.

Our profitability has doubled, driven by structural improvements across our business divisions coupled with targeted reallocation of capital. We have managed to meet our three year target for capital generation a year early and we are rewarding our shareholders with increasing payouts on the back of that. We are dynamically adjusting to a changing environment ensuring that we are best positioned to maximize the value we generate whilst we continue to invest heavily on the key enablers of our business plan that means digital capabilities and our people. On slide six, you can see the tangible rewards that we are reaping. Our performing loans are up 16% over the two years.

EPS and return on tangible equity have doubled, whilst capital generation has increased even faster. Moving on to slide seven. It should have come as no surprise that 2024 has come in well ahead of our targets for the year. Across all metrics, we have been able to beat our guidance. We We have every intention to continue to build upon this track record of delivering on our promises.

As you can see on slide eight, the uplift we have seen in profitability has come from two sources. Firstly, through the structural improvement in the profitability of our business units and secondly, through the reallocation of capital from dealing with problematic assets of the past to funding future growth. Remember that we have been extremely diligent in ensuring that we fund profitable growth and profitability is viewed holistically, not only by ensuring some pricing and underwriting policies, but aiming to service a wider range of needs that our customers do have and optimizing the capital that we allocate for that. This holistic approach has allowed us to see improvement in profitability despite spread pressure. Slide nine.

The operational work that we are doing is what allows us to drive these results. What you see here is just the tip of the iceberg as we would need a dedicated event to provide you with all the details. In brief, retail is fully digitalizing everyday banking needs under a new service model that has freed up our people to devote time on complex customer needs. Wealth continues to scale its engine and is customizing its investment position. Wholesale has operationalized its redesigned teams with industry experts now providing specialized advisory services and financing knowledge for clients.

On the international front, 2024 has been dominated by the improvement in the return of the capital employed in Romania, but Cyprus is also making strides in growing its book. When it comes to our balance sheet, we have optimized the capital stack, we have ample amounts of excess liquidity and we are well positioned for rating clients, all while reducing NPEs below 4%, and that is two years ahead of the plan, while delivering the capital target of sixteen percent one year ahead of the plan. And last but not least, we have completed $2,600,000,000 of sustainable disbursements in just two years. Turning to our partnership with UniCredit now for an update on slide 10. One market funds bought by our private banking and affluent customers are now up to $400,000,000 while the joint venture in Bangka Surrounds is expected to close early in the second half of twenty twenty five.

Our wholesale offering continues to benefit from our partnership, looking across indications, trade finance guarantees, letters of credit, FX, clearing, trading and treasury, factoring as well as brokerage. As we have said before, we have also begun to pitch jointly for certain DCM deals and we are now expecting to expand also to ECM and M and A. The impact of this relationship are both direct and indirect, which means we are unable to give a hard number quantifying all this effort. But even though certain impacts have direct incremental benefits as with the sale of all market funds for example, in most cases, 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 our stakeholders. And lastly, on slide 11 before I hand over, I think I have demonstrated clearly how we are delivering well ahead of our plan.

This is flowing to the bottom line, both in terms of earnings growth, but also importantly in terms of capital generation as that is what allows us to fund future growth and distribute value to our shareholders. In two years, we have been able to deliver 100% of the three year plan for capital generation. We have deployed $600,000,000 to fund the growth of our balance sheet. Just over $400,000,000 has been set aside for distributions to shareholders and we still have significant firepower over and above our management targets. We’ll come back to this towards the end of the presentation, but for now to run through our 2024 results in more detail, Vasily Cosmar, over to you.

Vasily Cosmar, CFO, Alfa Bank: Thank you, Vasily, and hello to everyone from my side as well. A lot to cover today. As the focus is likely on the outlook, We’ll do a speed run of results, but please do feel free to come back with questions in the end. Let’s jump to Slide 13, please. A few one off items worth pointing out in the quarter before we look into recurring results.

Gross of tax, the top off of our inorganic NPE reduction, cost us about $40,000,000 But even that has been counterbalanced by better results elsewhere, mainly on Skyline, which is our REO transaction. Other than that, we’ve also accrued million donation to the Marietta Yanati program for the reconstruction of schools, while there’s also an million top up to the voluntary separation scheme provision as the perimeter has now been finalized. Lastly, note that there is also positive circa $20,000,000 tax write off and is also including other adjustments here, so the tax charge you’re seeing is recurring. Our lien EUR36 million negative in one offs. Next (LON:NXT) slide on main P and L items.

Operating income has grown both in the quarter versus last year despite pressure on the top line as the contribution from fees continues to grow and the quarter saw strong financial income result. Costs have admittedly landed somewhat higher than expected even if we account for the seasonal effects we see in Q4 and we’ll talk about that in a bit. On impairments, Q4 has seen customary cleanup, but I think it’s clear that we continue to face a benign environment when it comes to us quality. Lastly, on the bottom line, reported profits at $165,000,000 despite the one offs. Profits for the whole of 2024 at $654,000,000 up 6% versus last year.

On a normalized basis, performance was even better with profits coming at $861,000,000 up 9.4% for the year. Next slide on balance sheet items. Performing loans up 8% in the quarter and a 12% jump in the year. Customer funds also up 2% in the quarter with better trends in deposits, but also solid AUM growth with a total growing also in the double digits, up 14% year on year. Tangible book value was 3% up in the quarter, and if we add back the amount spent in the buyback, growth was actually 5% in the quarter.

Same goes for the annual growth rate, which amounted to 11% when we adjust for payouts. And then on capital, we have finished the year at 16.3% in terms of CET1, adding 77 basis points in Q4 with the deconsolidation of Aflacran Romania more than offsetting the growth in RWAs. On Slide 16, we show the two main components of revenues. Net interest income was basically plateaued. Higher average loan balances have offset the impact from lower rates.

So you can see that the contribution from loans has not come down much this quarter. Note that this was achieved on a steeper decline in base rates as the three month year arrival was down some 55 basis points in Q4 versus a 24 basis points decline in Q3. On deposits, clearly not much of a gain partly due to the lag effect in repricing time deposits which you can see in the jump of the deposit better this quarter from 18% to 22%. We have had a benefit this quarter from repricing, but it’s not much. Most of the benefit is ahead of us, but whatever small benefit we’ve had has been offset by the large volume growth we’ve seen before.

Onto the non commercial side, the contribution from bonds continues to grow as expected coming both from higher volume and better trades as reinvestments are as per our guidance. Lastly, on the liability side, the quarterly benefit you see here is due to the repayment of certain debt instruments. All in, NII was practically flat in the year. On the fee and commission side, another very strong quarter benefiting from a record quarter for disbursements and a further boost from our asset management business, even though we had already met the

Vasily Psartis, CEO, Alfa Bank: budget for AUMs for this year.

Vasily Cosmar, CFO, Alfa Bank: So there was less transaction related fees this quarter on account of lower sales. Overall, the year has ended up 12% up versus twenty twenty three and five % above our $400,000,000 guidance. We both track cost light as Q4 needs a bit of explaining. So let’s switch to Slide 17 please. There are few legacy items and when combined with IT investments have kept depreciation a tad higher than we would like.

But you will see later in the presentation this trend should be coming to an end soon. On staff costs, the voluntary separation scheme was delayed somewhat versus our original planning, which has meant that in Q4 we saw some overlapping with replacement hires, leaving staff costs higher in the quarter. Again, that’s normalized starting with Q1 this year. And then on G and A, you can see the usual seasonal partner that’s mainly driven by taxes and marketing expenses at the end of the year. Let’s move to Slide 18 on the two main assets we have.

Performing loan balances, we saw $2,000,000,000 of net credit expansion in the quarter on account of steep increase in this person for corporates. We’ve got strength at the end of the year, beating our updated guidance for the year and setting us for a solid 2025 on account of higher staffing balances. If we look at the full year, business disbursements stood at $10,000,000,000 up by just over 30% year on year. And encouragingly, the same 30% is true for mortgage and consumer disbursements, where growth is now at breakeven and no longer a drag on balances. On customer funds, we’ve seen a $1,300,000,000 influx of deposits this quarter with more than half coming from individuals.

Be mindful that there’s a bit of seasonality in Q4. So if we look at the full year numbers, deposit growth was at 5.3%, again above guidance. The proportion of time deposits was marginally higher in the quarter at 26%. LUN net sales stood at circa $100,000,000 in the quarter with an equivalent valuation effect, while for the year we valued $1,800,000,000 with an extra 0.9% positive revaluation. This means that our total AUMs were up 17% versus last year, 17% versus last year and noteworthy achievement to say the least.

Slide 19 on asset quality. As was foretold in Q3 results, the NPE ratio is now down to 3.8% on account of growth in the denominator as well as the reclassification of circa $250,000,000 portfolio held for sale assets. Given the composition of our portfolio, we’ve also seen a jump in our coverage ratio to 53%. Cost of risk came in at 67 basis points for the quarter on account of some year end cleanup with the full year at 63 basis points, a bit better than our 65 basis points guidance. Slide 20 on capital to finish up with results.

Just 14 basis points of capital generation organically in the quarter on account of the high loan growth we saw and hence our LOVDA consumption. The year coming at 152 basis points. Transactions have added more than 100 basis points this quarter, bringing the total for the year to 164. And then of course, there was a further 34 basis points of dividend accrual in the quarter. Total (EPA:TTEF) for the year, just above 100 basis points dividend accrual.

With that, let’s move to the business plan and Slide 22 please. I think you will agree that our business plan assumptions are fairly conservative. We see rates dropping down to 2% and staying there. This is 15 to 20 basis points tighter than the current forward year curve. We expect a bit more than $2,000,000,000 in the net credit expansion for the year and a similar number for deposits.

Note that we assume a flat market share in both loans and deposits. So what is reflected here is our expectations for growth in the market. No real improvement in the deposit mix and hence no real movement in the deposit method. You will find updated information around NII sensitivity in the appendix. But that’s effectively the bedrock of the outlook for NII.

Sure enough, we will see pressures from lower rates and spreads, but as we highlighted our Q3 results, we have a solid starting base in terms of volume and good prospects for growth ahead of us, a stable from our securities books, come very fruit. And that’s exactly what we’re showing on Slide 23. As mentioned, NII is plateauing and we’re fairly confident that the first quarter of twenty twenty five will be the bottom for our NII. Low rates and loan repricing will be the biggest force for the year, but there’s a long list of offsetting factors that will see us finish the year with net interest income over $1,650,000,000 and achieving two years of Latin II while rates halved from 4% to 2% reflects our defensive rate positioning we have discussed previously. There will be some incremental pressures in 2026 from the lag effect of repricing and even lower average rates, but bearing any major surprise, we should go back to basics with NII driven by loan growth.

Slide ’24. Our defensive NII profile will be coupled with continuous improvement in fee income. As you can see, the government initiatives that were announced in December will see our fee income rebase to circa 400,000,000 From that staffing base, we expect to largely repeat the 2024 performance and grow by around 13% in 2025, drawing on the strength of our wealth management franchise as well as benefiting from the increased activity we’re seeing on lending and transaction banking. I think the impact we’re seeing from the Unicres partnership is quite clear here as you can see that most of these items were working closely with them. After making a relatively large step up in 2025, where we see various initiatives bearing fruit, we see a bit more than $40,000,000 growth per year or 9% per annum for the next two years.

Out to 2027, this gives us about 22% of revenue. We thought it was worth being a bit more explicit about our other revenues for the coming years. We’re seeing more client volumes coming through our trading line, so we now expect to make $80,000,000 of recurring trading income going forward. And you will see that we expect our other income to increase for the coming years. Mind you, this is not related to the income coming out of our 10% stake in Romania.

That’s going to come just above the pretax line and thus isn’t including revenues. What we have here is an increased contribution from our advisory and investment banking businesses as well as a step up in contribution of recurring rental income to our P and L, which in the near term will mostly come from contracted exposures through our participations in Prodia and Skyline as well as selective investments in prime real estate assets. Costs on Slide 26. We need to highlight that 2025 will see us benefit from a one off reduction in depreciation as certain IT assets have reached the end of their useful life. That’s the main reason that we expect the cost base to be marginally up versus 2024, whereas in reality the underlying run rate is closer to 3.5% as we do see inflationary pressures both in wages and general expenses, while we’re also ramping up our investments to capitalize on revenue generating opportunities.

Obviously, similar to what we discussed about Q4, the delayed VSS will have a no common positive effect on staff costs for 2025, curtailing growth. Turning to asset quality, we’re pretty much there. So the next slide mostly serves to underline our commitment to retaining a resilient balance sheet. Our NPE ratio will continue to fall. I’m sure you do the math and realize that it’s mostly the nominal that effect.

So yes, we are being a bit somewhat conservative on what we’re forecasting in terms of inflows, especially in the context of benign asset quality environment we’re experiencing. We do expect a mild escalation of the cost of risk as we’re managing smaller portfolios of NPE’s positive cleanup and that should see the coverage remaining above 50%. Last but not least, let’s talk about capital on Slide 28. In 2025, we expect to fully absorb the impact from the finalization of Basel III and retain our capital ratios at current levels despite significant growth in the balance sheet. Mind you, the impact you see here from distributions incorporates a period of at least 50% as well as the impact from PVC acceleration.

Beyond 2025, we expect a similar evolution to our capital base, obviously with no further impact from regulatory changes. So our CET1 is expected to grow to 17%. As a result, the ratio of DTCs to CET1 is expected to decline to 23% by 2027. And note that our capital will consequently remain above 21% with Emerald above 28%, leaving us ample amounts of excess capital. To summarize on Slide 29 please, we remain focused on maximizing the value that we pay for our stakeholders.

Our earnings are sustainable and should be on an upwards trajectory. We have anticipated the reduction of interest rates and have positioned our balance sheet accordingly. Our franchise strengths are well aligned with the evolving environment, making us confident of the growth prospects for our business. And we will continue to show strong discipline on maintaining our efficiency and improving our asset quality profile. The output is that our earnings, profits and profitability should grow.

Our commitments are unchanged. The focus remains on delivering on EPS profitability, capital generation and distributions. And as you can see on the slide, we’ve taken this a step further and provide you with reported numbers as we don’t expect much divergence from normalized going forward. To make life easier for you, we’ve also gathered the main P and L items that we have referenced across this presentation in a

Vasily Psartis, CEO, Alfa Bank: Masih. Well, thank you. A few more words from me as we are currently at an important juncture. Let’s turn to Slide 31, please. I think our story should be clear to everyone by now.

It is already apparent that our strategic actions alongside our balance sheet positioning will allow us to maintain an upward trajectory to our bottom line starting from 2025 despite the challenges from falling rates. We have defensive NII profile. We’re capturing the tailwind of loan growth. We’re stepping up our target for fee income generation and are seeing the partnership with UniCredit yield benefits. This dynamics will work even more so in our favor beyond 2025, where we see earnings growing by eight percent on an annual basis, as you can see on Slide 32.

The structural growth potential of the region where we operate will allow us to maintain a pace of net credit expansion above the $2,000,000,000 mark. At the same time, our franchise is uniquely positioned to benefit from the long term uplift in the penetration of fee generating banking services, which coupled with the partnerships we have put in place, will allow us to improve the profitability of our business. Slide 33, please. The trends of 2025 and beyond allow us to maintain a differentiating positive EPS growth trajectory in the medium term, which we believe differentiates us from the rest of the pack. EPS is expected to grow by 6% per annum over the planning period, well above consensus estimates and before accounting for the effect of any buybacks.

Let me underline that. Buybacks should be viewed in the context of our overall capital allocation, so let’s look at that in detail starting with Slide 34. Our first and foremost priority is to fund profitable loan growth. That is the core of our business. Performing loans are expected to increase by circa billion in the planning period.

That means 23%. Growth of our balance sheet will absorb close to EUR 1,000,000,000 of capital. And as Vasiles demonstrated earlier, this is well within our organic capital generation capacity. Let’s now turn to slide 35 please. Beyond funding organic growth, we aim to have a sustainable payout.

Last year, we reinitiated dividends with a 20% payout. This year, we set aside CHF $280,000,000 to pay 43% of reported profits, which we aim to increase to at least 50% in 2025. Evidently, our capital generation capacity suggests that we ought to be paying north of 50% of profits on an ongoing basis. And when it comes to the splits between a cash dividend and a buyback, the preference is clearly in favor of a buyback at this stage. This shouldn’t come as a surprise to anyone.

Given where the shares are trading, it is hard to compete with the return on investment coming from a buyback. We are still making sure that we built a progressive cash dividend so we can eventually reach the industry average yield, but this is, as far as we are concerned, the best allocation of funds. The 75% to 25% proposal in favor of a buyback has been decided in light of the above so that we can ensure a progressive increase in cash dividend whilst maximizing the impact that the buyback can have. Finally, it’s worth noting that given the pace of capital generation and our strong capital position, we are comfortably able to fund both an acceleration in loan growth as well as a more generous distribution. Let’s turn to Slide 36, please.

Ordinary payouts are not the end of the story. Our excess capital provides us with significant firepower to do more. Extraordinary dividends are not on the agenda with the regulator for now. But we are not going to sit idle if there are opportunities that can create value for our shareholders. Any bolt on acquisitions, we need to satisfy strict criteria as we are particularly diligent when it comes to allocating capital for M and A.

These need to be accretive to EPS, to return on core equity Tier one, need to generate a minimum return on investment of 15% and not impact the ordinary distribution. And of course, most importantly, need to accelerate the delivery of our strategy. But instead of going over the theory, let’s talk about practical examples. And let’s start with Slide 37, please. One example of such M and A is the recent 100% acquisition of Fintech Bioneer Flexin, Fin, an innovative factoring platform primarily serving Greek and Cypriot small and medium enterprises and non penetrated market segments with significant growth potential.

Flex (NASDAQ:FLEX) Fin, which previously attracted many investors and serves a large scale clientele, offers best in class data driven IT infrastructure within a customer centric environment, while offering a tailored product range adhering to strict regulatory requirements. FlexSim will be merged with Alfa Bank Factors. This is Alfa Bank’s existing factoring businesses that has a long successful history and market leading position. Flexfin’s innovative and advanced IT platform and accelerated digital offering is expected to enhance efficiencies and reinforces Alfa Bank’s commitment to SMEs as a key pillar of economic growth. The deal will bring higher revenues from fast market penetration and cost sale opportunities in the high potential factoring segment as well as cost effectiveness leveraging FlexFin’s strong IT platform.

This ensures a strong return on investment in line with the group’s ambition. In addition, the acquisition strengthens our team as Alfa Bank welcomes a number of highly skilled professionals from FlexFin, including the two co founders to enhance its expertise on the space. Looking forward, we aim to exceed billion factor in financing in the coming years, targeted 4,500 small and medium enterprises. The transaction is expected to be completed in the second quarter of twenty twenty five with benefits starting to accrue within 2025. As you can see now on next slide, Slide 38, yesterday evening, we have also announced an agreement on the key commercial and legal terms for the acquisition of substantially the whole of the banking assets and liabilities of Astrobank in Cyprus.

Cyprus is one of our core markets, and we are excited about the macro prospects for the country. What is more, the ongoing consolidation in the market has given us the opportunity to become the third party partner for corporates and individuals that look to diversify or append the relationships that have with the two large players. This acquisition solidifies our position as we will reach a 10% market share in terms of assets. Signing is expected in the second quarter of the year with closing by the end of twenty twenty five. On Slide 39, let’s please turn into that to discuss the financials of the deal.

We expect the profits coming from Cypress to double to $100,000,000 with Cypress contributing more than 8% of assets and closer to 10% of profits. As a cash transaction, it is obviously highly EPS accretive to the tune of 5%. But importantly, it comes with a small impact on capital of circa 40 basis points, meaning that the return we will get on the regulatory capital employed will be north of 40%. As a result, the transaction is expected to add 60 basis points to group returns. It is important to note that as the transaction has only just been agreed, our business plan projections do not include this impact.

So to keep it simple, the circa 12% return we have projected for 2025 would go to above 12.5% once the deal is consummated.

Vasily Cosmar, CFO, Alfa Bank: Slide

Vasily Psartis, CEO, Alfa Bank: 14. I hope that we have been abundantly clear on how we’re planning to create significant value for our shareholders in the coming years. We expect to have superior earnings growth in the coming years, above market estimates and with more coming from buybacks. Earnings growth will lead to significant capital generation over the period. On a minimum 50% payout ratio, our three year plan will allow us to distribute $1,300,000,000 to our shareholders.

That still leaves $1,400,000,000 as excess capital to be distributed or used to enhance our earnings generation capacity under strict criteria. Together, they represent some 65% of our current market cap. The whole management team is laser focused in delivering on these objectives. I appreciate it has been a long presentation at the end of what has been a long week, but hopefully you have found it to be interesting. And now let’s please open the floor

Mina, Conference Call Operator, Chorus Call: The first question is from the line of Shmuel Eleni with Axia Ventures. Please go ahead.

Shmuel Eleni, Analyst, Axia Ventures: Good morning and congratulations for this strong set of results and on the outlook. Just one question from my side. There is a lot of talking in the market about M and A activity. The available assets will be limited. So the four banks in the country will be competing for the same assets.

What gives you the confidence to expect that you can deploy your excess capital in a profitable way in the outer periods?

Vasily Psartis, CEO, Alfa Bank: Well, Eleni, I think we have already demonstrated that, haven’t we? But let me go step by step on this one. I don’t think it is a question on appetite. Our core equity Tier one capital is very high with a current buffer of as we said about SEK 1,000,000,000 And this and let me underline that this allow us to do simultaneously. On the one hand, invest organically and capture the existing strong momentum.

Then it allow us to distribute a material amount of our earnings back to shareholders. And thirdly, pursue several inorganic opportunities that enhance either a product offering as it was the case of Flexfin or boost our market share in international operation as it was the case with Astro. Therefore, the criteria that we have put out, we are already demonstrating that we definitely adhere to them. And this is our North Star when we are looking at opportunities. And trust me, in the current environment, there are plentiful opportunities around.

We have a clear focus on bolt on actions that are absolutely compatible with what we’re doing. So strategically and financially, it has to make sense. Now so far it hasn’t been anything on the market on the two transactions that we have done. We’ve managed to negotiate with them privately in absolute focus with the respective sellers, which demonstrated that we were clearly the best option for them and they decided to go unilaterally. So I think this is something that we probably would be looking forward also in other situations.

Shmuel Eleni, Analyst, Axia Ventures: Thank you very much. And again, congratulations for the strong set of results.

Mina, Conference Call Operator, Chorus Call: The next question is from the line of Kemeny Gabor with Autonomous Research. Please go ahead.

Kemeny Gabor, Analyst, Autonomous Research: Hi, Tim. Just a brief one from me. I believe if we look at your guidance relative to the consensus, one key delta is the performing loan growth outlook. You expect to get to EUR 41,000,000,000. And I believe that is around or even more than EUR 5,000,000,000 more than what consensus assumes.

So my question is, how can you substantiate this guidance, please? What do you think will enable you to grow the loan book by that substantial amount? And which sectors, which segments do you see as the most attractive? Thank you.

Vasily Cosmar, CFO, Alfa Bank: Thank you, Gabor. I would say on our performing loan assumptions, primarily as mentioned on the presentation, we’re projecting the market to be growing at roundabout SEK 9,000,000,000 to SEK 10,000,000,000 per year and Us holding us a stable market share throughout this period. I think given that Greece has been achieving these numbers in the past couple of years and given the GDP growth is projected up to the tune of 2% for the years to come, I think that’s a fair assumption on our side. With regards to sectors and areas where leasing is going to come, we expect this to be pretty consistent with what has been happening so far. So to a good extent it has to do with infrastructure, has to do with the transition of energy and renewable energies.

And as always for Greekbank, there’s a bit of shipping into the mix. Hope this answers your question.

Vasily Psartis, CEO, Alfa Bank: Let me, Gabor, let me put another couple of points, which I think are important for the next three years to come. The first is that we have the privilege of having this relationship with UniCredit, which is one of the largest commercial bank in the space. We have a privileged relationship also as far as syndication is concerned. Therefore, we are start seeing a good number of credits, good credits beyond Greece and we are starting to participate on that based on our criteria as well. The second is that as far as Greece is concerned, now that we are seeing a more I would probably is not the right word, but I’ll say that is a more democratization as far as growth is concerned.

The growth is starting now to trickle down from the very large corporates into the large SMEs. And within the three year period, you will see that also that it will trickle down also down to the SBs, at least those SBs that would have done all the right choices in terms of getting closer to larger companies and create a cluster around them. So this is an opportunity and we have already done steps. The FlexPryn transaction, for example, is one that allows us to have a come together of our larger clients with the smaller clients of Flexfin and create a full cluster around the value chain creation on them. And not to mention that retail has not yet kicked in.

Look for example the disposable income in Greece and the per capita GDP in Greece versus Bulgaria The local retail is in Greece and local retail is in Bulgaria. Star contrast. These are things to come.

Kemeny Gabor, Analyst, Autonomous Research: That’s all fair. Thank you for the color. I appreciate

Mina, Conference Call Operator, Chorus Call: The next question is from the line of Mehmetroghi Osman with Ambrosia Capital. Please go ahead.

Mehmetroghi Osman, Analyst, Ambrosia Capital: Hi, Manny. Thanks for your time and the presentation. Just to confirm, looking at your EPS guidance on reported and normalized adjusted, we can say maybe there’s a small bit of VES left for next year and then really no more material NPE cleanup charges. Would that be a fair conclusion? Thank you.

Iason Kipaksooglou, Head of Investor Relations, Alfa Bank: There is a one off that we have put in place in 2025. It is SEK 50,000,000 and it does relate to potentially things that we will need to take care of in the coming year.

Mehmetroghi Osman, Analyst, Ambrosia Capital: Would it be more Versus or not necessarily?

Iason Kipaksooglou, Head of Investor Relations, Alfa Bank: Well, no, I don’t think we can specify exactly what it relates to.

Mehmetroghi Osman, Analyst, Ambrosia Capital: Understood. Thank you.

Mina, Conference Call Operator, Chorus Call: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.

Vasily Psartis, CEO, Alfa Bank: Well, thank you very much for your participation. I’m really looking forward to meeting with a good number of you over the next weeks as we’re going to be road showing. So thank you once again and we’re looking forward to meeting you back. The first quarter results which is going to be sometime in May. Thank you.

Mina, Conference Call Operator, Chorus Call: Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant afternoon.

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