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Alpha Bank reported its Q3 2025 earnings, highlighting significant growth in profits and a robust financial outlook. The bank achieved a nine-month profit of €704 million, with an earnings per share of €0.27, reaching 73% of its annual target. The bank also announced a planned interim cash dividend of €111 million.
Key Takeaways
- Alpha Bank's profits for the first nine months reached €704 million.
- The bank launched new products and expanded its investment banking capabilities.
- A strategic partnership with UniCredit enhances its competitive position in Europe.
- The bank projects earnings growth of 12% beyond 2025.
Company Performance
Alpha Bank demonstrated strong performance in Q3 2025, with profits amounting to €704 million for the first nine months of the year. The bank's normalized return on tangible equity stood at 13.9%, indicating effective capital utilization. The acquisition of Flexfin and other strategic moves have bolstered its market position, particularly in transaction and investment banking.
Financial Highlights
- Revenue: Not specified in the call summary
- Earnings per share: €0.27, achieving 73% of the annual target
- Accrued for distributions: €352 million
- Interim cash dividend: €111 million planned
Outlook & Guidance
Looking ahead, Alpha Bank expects earnings growth of 12% beyond 2025, with EPS projected to grow by 10% annually. The bank has set a full-year profit guidance of €850 million, which is 5% above its original target. It is also targeting mid to high single-digit loan growth and plans to host an Investor Day in Q2 2026.
Executive Commentary
Vassilios Psaltis, CEO of Alpha Bank, emphasized the competitive advantage gained through the partnership with UniCredit, stating, "Our partnership with UniCredit gives us a competitive advantage that differentiates us from the rest of the pack." He also highlighted the bank's ongoing profitability, remarking, "Our profitability is still on an upward path."
Risks and Challenges
- Economic fluctuations in Europe could impact loan demand and asset quality.
- Integration challenges with recent acquisitions may affect operational efficiency.
- Regulatory changes in the banking sector could pose compliance challenges.
- Competitive pressures in transaction banking and asset management may increase.
- Macro-economic pressures, such as inflation, could affect consumer spending and borrowing.
Alpha Bank's strategic initiatives and strong financial performance position it well for future growth, despite potential challenges in the broader economic environment.
Full transcript - Alpha Pyrenees Trust Limited (ALPHA) Q3 2025:
Jotta Jokorus, Call Operator: Ladies and gentlemen, thank you for standing by. I am Jotta Jokorus, call operator. Welcome and thank you for joining the Alpha Bank conference call to present and discuss the 9 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 Alpha Bank Management. Gentlemen, you may now proceed.
Iason Kepaptsoglou, Head of Investor Relations, Alpha Bank: Hello everyone and welcome to the presentation of our third quarter results. I am Iason Kepaptsoglou, Alpha Bank's Head of Investor Relations. Our CEO, Vassilios Psaltis, will lead the call with the usual summary and a few updates. Our CFO, Vassilios Kosmas, will then go through this quarter's numbers in some detail. Q&A will come at the end, and we should wrap up within the hour. Vassilios, over to you.
Vassilios Psaltis, CEO, Alpha Bank: 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 EUR 704 million, already more than what we have made in the preceding fiscal years. Earnings per share of EUR 0.27 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 EUR 352 million for distributions so far this year, already more than the distributions out of 2024 profits, and we intend to distribute circa EUR 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 become 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 Alpha Bank to circa 30%, reinforcing the depth and commitment of our partnership. This is not just a financial investment. As UniCredit CEO, Andrea Orcel, has repeatedly stated, it's a strategic partnership delivering tangible commercial, operational, and systemic benefits for both institutions. We have cooperated closely and successfully combined our Romanian subsidiaries in a record time frame, created a stronger regional footprint, and unlocking synergies in cross-border operations. Furthermore, our clients now benefit from UniCredit's pan-European network across 13 countries. This uniquely positions Alpha Bank 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 One Markets Fund suite has been a major success, with close to EUR 900 million distributed to our customers.
In wholesale banking, we have collated over EUR 300 million in letters of credit and guarantees through our transaction banking business and approved circa EUR 500 million in international syndicated lending since the partnership began. Additionally, bilateral FX payment volumes have reached EUR 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 loan growth.
The structural growth potential of the regions where we operate will allow us to maintain a pace of net credit expansion above the EUR 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. As mentioned above, we are leveraging the partnership with UniCredit to accrue tangible benefits quarter after quarter. Our profitability is still 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-à-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. 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 payouts. 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 continuing 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 heightened competition, particularly in the large corporate segment, which has led to gradual compression in 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 ten, 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 UniCredit 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 effects. 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 balanced and equity funds.
These are products that carry higher management fee margins, helping our fee CAGR in asset management reach an impressive 32% since the first quarter of 2023. 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 products, 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 a—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 a payout north of 50% is sustainable, aligning with our strategic objective to deliver predictable and growing returns to our shareholders. Cash dividends have followed a similar upward path, starting with EUR 61 million out of 2023 profits and rising to EUR 70 million for 2024. For the current year, the introduction of an interim dividend of EUR 111 million to be paid in the fourth quarter confirms the positive momentum and our disciplined approach to capital deployment.
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, Astra Bank, and Axia Ventures, they are fully aligned with our framework. Flexfin enhances our factoring capabilities and opens access to underserved SME segments. Astra Bank 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 UniCredit 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 tangible equity, at the cost of circa 60 basis points of capital. Integration efforts are already underway, and we're working towards 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.
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 full-year result stage, you should expect to receive guidance for 2026, but with a three-year business plan subsequently unveiled during the Investor Day. With that, Vassilios Psaltis, the floor is yours. Thank you, Vassilios. Hello to everyone from my side as well. Let's start with P&L on slide 16, please. Quiet quarter in terms of one-off items this time.
We've had a EUR 25 million well-publicized donation to the Marietta Janak program for the reconstruction of schools, as well as a few transformation and NP transaction-related costs. As you can see, trading and other income was also particularly low this quarter, mainly stemming from the liability management exercise we did on our tier two note back in July. That had a EUR 12 million impact. As a result, our reported profit is a bit lower this quarter, while on a normalized basis, we're still closing comfortably above the EUR 200 million line. Obviously, these two have implications for the full-year guidance. Overall, we still expect to beat our original guidance of EUR 850 million in reported profits by a bit over 5%. We're still looking at EUR 2.2 billion of revenues, north of EUR 1.6 billion in NII, and north of EUR 460 million in fees. Costs are still expected to be contained at EUR 870 million.
We're tracking very well against the improved cost of risk guidance of 45 basis points. Associate income would likely come in at EUR 30 million. Tax, excluding the one-off ETA recognition, should rat about 26%. Finally, in terms of one-offs, we're likely going to have a couple of negatives in Q4, bringing the total for the year to positive EUR 30 million. All in, that should give a normalized EPS of EUR 0.35, in line with the consensus. With that, let's move to the next slide and talk about the underlying results and the main P&L items. Both net interest income and fees are growing sequentially, so the underlying core revenue picture remains solid. Operating income was down 5% Q&Q, solely attributable to trading, where, as mentioned, this quarter we had a loss on the LME.
Costs at EUR 214 million were flat versus previous quarter, and we're still trading better than expected. We expect a significant uptick in the fourth quarter on account of some seasonality, typical towards year-end, and thus retain the full-year guidance of circa EUR 870 million. Impairments came in at EUR 45 million for the quarter, bringing cost of risk up to 45 basis points, in line with guidance and reflecting a benign credit environment. Finally, on the bottom line, reported profit after tax was down 36%, as we had a large positive one-off in the previous quarter and a small negative this time. Normalized stood at EUR 217 million, almost flat Q&Q, so I still feel very comfortable with the full-year guidance. Next slide on the main balance sheet items. Performing loans are up 2% in the quarter and a 13% jump from last year.
Customer funds are also up 4% in the quarter, with a year-on-year increase at 9%. Tangible book value up 1.3% in the quarter on goodwill recognition, with the annual growth rate of 13% after adjusting for dividends. On capital, we stand at 15.7% in terms of fully loaded CET1. As you might remember, we will have a 60 basis point headwind in Q4 upon completion of Astra Bank, already completed, and Axia. Let's move to slide 19, where we discuss the two main components of revenue. NII was up for one more quarter, continuing the upward trajectory. At EUR 42 million, we're still seeing the impact of rate declines and, to a lesser extent, the dollar depreciation. On the commercial side, with average rates still down in the quarter, we're seeing a lower contribution from loans.
Even though rates appear to have stabilized, the lag effect of repricing means that we still have a headwind going into Q4. Deposits and funding costs continue to improve, although the pace of rate decline means that time deposits pass-through are more elevated than expected. With rates now hopefully at the trough, we should see some improvement in time deposit spreads. On the non-commercial side, securities book have not grown, so there is no material improvement this quarter. On the fee and commission side, we saw a small decline in the quarter. If we exclude the gain from the OneSkim partnership with Visa in the previous quarter, third quarter was actually up 7% on a comparative basis. For yet another quarter, the star performer was asset management of EUR 32 million, meaning we are already currently running double the run rate of the 2022-2024 three-year average.
Business credit fees came at EUR 33 million, up 2.3% versus the second quarter. Fees from cards and payments are seasonally strong in the third quarter. Overall, fees are up 10% versus the same quarter last year, and even more if we adjust for the government initiatives, reinforcing the guidance we have given you for the year. Now, let's move to slide 20 to look at loans and customer funds. Performing loan balances reached EUR 35.7 billion, with some EUR 700 million of net credit expansion in the quarter. Another strong quarter with EUR 3 billion of disbursements and similar patterns above. Corporates, including SMEs, driving growth evenly spread across sectors. Some small contribution from retail at around about EUR 50 million. Year-to-date, net credit expansion has now reached EUR 2.2 billion, while once we account for the negative effects headwind from the weaker dollar and the asset quality flows, performing balances are up EUR 1.6 billion.
Net credit expansion is tracking better than expected, as the repayment of a large circa EUR 300 million corporate exposure we were expecting in Q3 has yet to occur. This repayment has now been rolled into Q4, so do take that into account when forming your estimates. Spreads continue to be under pressure, but we remain disciplined in our underwriting criteria. As such, we will avoid deals or refinancings that do not meet our own credit criteria and are not accretive to our shareholders. Turning to customer funds, another quarter of solid growth, with circa EUR 1.6 billion of growth in deposits, almost entirely coming from domestic corporates. Please note that about EUR 500 million relates to bond placement that we led at the end of the quarter, which has quickly reversed in Q4.
On AUMs, we continue to see good underlying net sales, EUR 400 million this quarter, with circa three quarters driven by one-market funds this time. Year-to-date, we have had EUR 1 billion net sales, reaching the year-end target a quarter earlier. AUMs have grown 17% versus last year, one-third, as you can see, attributable to net sales, and two-thirds coming from valuation effects, predominantly in equities. Contrary to the local industry, the dominant products we sell are equity and balance funds, with good management transaction fees rounded the typical target maturity products that replicate term deposits. The above reflect the strength of the bank franchise. Turning to slide 21 on asset quality, NP ratio was at 3.6%, mainly on account of circa EUR 70 million of retail net flows. Coverage ratio has thus edged to 55%. The underlying picture remains solid.
We're not particularly concerned with any flows, as should be evident by the underlying cost of risk that stood at 26 basis points for the quarter. We don't expect any meaningful surprises in the coming quarters and remain on track to deliver the full-year guidance of 45 basis points. To wrap it up, let's turn to slide 22 on the capital. This quarter, we had 38 basis points of capital generation organically, and this includes everything that is business as usual, so P&L, DTAs, the usual BTC amortization, the semi-annual 81 coupon, and RWA growth. Overall, we're still very much on plan for organic capital generation. As mentioned, we have accrued a further EUR 93 million towards dividend, bringing the total year-to-date to EUR 352 million, whilst 37 basis points of capital you see here includes BTC acceleration.
All in, CET1 ratio stands at 15.7% on a fully loaded basis, or 10 basis points higher if you take into account pending transactions. Note that the transitional CET1 ratio stands at some 36 basis points higher at 16.1%. With that, let's open the floor to questions. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Dimitrios Alex with Jefferies. Please go ahead. Hi, just two questions from me.
Next quarter, we see the Axia and Astra Bank deals close. If you were to look across your current product offering and income lines, are there any other areas where you see gaps or you would like to strengthen that could be supported by the bolt-on acquisitions or potentially supported through the partnership with UniCredit? Just secondly, on loan yields, when should we expect the yields to stabilize if rates were to remain flat from here and we start to see the end of the replacing lag that we are likely to see continue into Q4? Thank you. What Alex said, Vasilios, I will take the first one. We are mixing up the Vasilios here. On the area of bolt-on, as we have said in the past, bolt-on has been quite an efficient and effective way of doing two things.
Number one is to quickly go to narrower areas where we spotted gaps or where we want to accelerate further our product offering and/or geographies. The second element that we have been fortunate to tie in so far is that we acquired with it excellent human capital, which is, as you well know, currently one of the biggest constraints that we have across the industry or across the industries, I should rather say, for growing further. This, to us, being a proven strategy, which we do continue to scan the universe for areas like that. As I said, it is not just about gaps. It is also about progressing faster. There are such, and we are actively looking into that.
If I may add regarding your question for the closing of the announced transactions, Astra has closed, so in the fourth quarter, you will see its numbers in the group numbers. As far as Axia is concerned, we expect closing in the fourth quarter of 2025. If I can pick up on the second part of your question, if I understand correctly, you tried to assess what the outlook for the NII. I mean, the first thing to note here is that we are still very confident on our total revenue projections for 2026. Now, as regards to the dynamics, you're right to say that some of the pressure that we had on the rates in Q3 versus Q2 will be abated, so you should expect a slightly better picture in Q4 versus Q3, so we continue this trend.
Most of the growth in NII, we're going to be looking at it in the 2026 numbers, where effectively we expect flat rates and the impact of volume growth on loans to come into play. If I could just follow up, so if we think about the loan yields in a stable environment, when do you expect them to be flat and we no longer see that repricing lag come through and so kind of lower interest income, excluding the volume effect? I think we need to leave that for the full-year stage where we're going to provide guidance for 2026. I do not think we ought to be commenting on that at this point. No, no, that's very clear. No worries. Thank you.
I think given Alex's question, just hold on this point, I think it is useful perhaps to give a bit, so sketching a bit on what may come our way for 2026, because I think the important thing for the market to understand is that for 2026, what we're going to be looking for is to capitalize on the strategic approach that we have taken so far. As such, I think we're comfortable with market expectation vis-à-vis our total revenues. That is the point I would like to stress that Vasilios also mentioned before. So far, we have been building on holistic relationships, which are now proven to be the core advantage of our bank, and that allows us to be more adaptable as the demand for non-lending services, including asset and wealth management, etc., is picking up.
That, I think, is a key takeaway, and that is what you should expect to hear more from us when we have our full-year results looking into 2026. Mr. Dimitrios, are you done with your questions? All done. Thank you. The next question comes from the line of Gabor Zoltan Kemeny with Bernstein Autonomous LLP. Please go ahead. Thank you. Can I just follow up on NII and specifically on corporate loan spreads, which I believe have been trending down? You showed that on page 29 of the presentation. Is this a trend you would expect to continue? I mean, 2.4% corporate loan spread is still very solid. That is the first one. Second one, you mentioned that the deposit pass-through has perhaps been higher than you expected. Indeed, you show a 65% deposit pass-through.
Can you elaborate on the dynamics here and how the front book, back book of the pricing of the deposit portfolio looks like? And just lastly, a very comfortable capital position, even if we take into account the upcoming transaction closings. How do you think about raising your distribution above 50% from 2025 results? Thank you. Let me try to pick on this. Thank you for the question. Starting with the corporate loan spreads, you're right to note that there's a bit of a linear seven or eight basis points tightening on a quarter-to-quarter basis. As we see the market, we're sort of leading the absolute level compared to our peers, so we're very happy with the mix that we have, that we keep some distance from the tightest situations. As mentioned several times, we are walking away from situations that don't fit our return on investment criteria.
I think it's useful also to keep in mind that the strategy here, when we're looking at the corporate relationships, is not all around spreads but around the overall relationship. That's why you see much of what we see lower in NII from spreads to be recouped from trade finance. Trade finance, for reference, is round about a bit more than 30%. Corporate transaction banking fees from corporate is round about 30% higher this year than the previous year. Now, on the time deposit pass-through, I think you're right to note that pass-through is pretty much stable at round about 65%. We're sort of tracking the market on that one, to be frank with you.
What we see happening in the market is that as rates stabilize, and mind you that rates practically have stabilized in Q3, the time deposit book takes around about six to seven months in our case to converge. You should expect in the next couple of quarters time deposit pass-throughs to go, I do not know, maybe collectively 4-5 points for the whole market, including us. I would not give you that for the next couple of months, but as I said, it should take a couple of quarters for this to materialize, assuming, obviously, that base rates are going to be at the same rate that they currently are, around about 2%.
On the point of, if I may take it, Vasilios, on the point of distribution, I think for 2025, it is clear that we expect to pay 50% of the reported profits, so that's close to EUR 450 million, EUR 111 million of which will soon be distributed as an interim dividend. From where we see it, we clearly have the capacity to grow higher than that, and it's something we intend to do from 2026 onwards, both in terms of absolute amounts on account of earnings growth and obviously subject to regulatory approval on the back of a higher payout. That's very helpful. Thank you. Just a small follow-up on the four, five points you mentioned. I'm not sure I got that. What did that refer to, please? Time deposit pass-through, Gabor. The pass-through. Time deposit pass-through. Understood. Thank you.
The next question comes from the line of Munari Filippo with JP Morgan. Please go ahead. Yes, good morning, and thanks for the presentation and taking my questions. I have two questions. The first one, I saw that you raised the normalized EPS target, excluding the buybacks, to €0.47 in 2027 from €0.46, I think. What is driving that? Is it better fees, better OpEx, or a combination of things? If you can please give some color on that, it would be super useful. The second thing, on the trading and other income side, I understand there is a €12 million negative input from tier two refinancing in the quarter, but that should explain only part of the weakness because the run rate would be still quite higher than that.
Can you please comment if there were other negative factors affecting the trading line in the quarter? Thank you. If I quickly take the guidance, the EUR 0.47 is something that we have disclosed back in August with the second quarter results, and it's mainly on account of a lower cost of risk. Hopefully, you remember the discussion we had back then about the improvement we've been able to produce on the guidance with cost of risk sustainably. That's the only reason behind the EUR 0.47 in 2027. On the other question, Vasilios. Sure. I mean, if you turn to page 16, if I understand your question, you're asking us around the Q2, EUR 30 million of trading and other income versus the Q3, EUR 1 million. You're right to point out that round about EUR 12 million is the LME.
The other element, which is noteworthy here, is rental income, to be frank with you, which is classified as other income. This is the dividend from our 10% shareholding in Prodea. This was a EUR 12 million dividend, which was paid out in June, and obviously, they do not pay such a dividend every quarter. I think more importantly, it is important for people to consider, and I think some of that is due on us too, that when the bank is reporting round about EUR 460 million plus net fee and commission income, we are missing round about another EUR 25 million-ish currently on an annualized base rental income, which other people used to report in this line. I think in the coming quarters, we should make this more clear because this is a recurring line coming in. On top of this, our risk appetite for real estate is growing.
This is an investment that we are continuously stepping our feet, so we expect more to come in Q4 in terms of investment and more recurring income to come out of these investments in 2026. Obviously, hopefully, you have to make some patience to give you a bit of a full picture around that in February. Very clear. Thank you. The next question comes from the line of Kantarovic Alexander with Roma Capital. Please go ahead. Yes. Thank you. Hello, hello. My question would be on UniCredit participation. Clearly, a major factor affecting your valuations, and now that they have reached 29% and possibly going higher, surely this partnership is having big strategic implications for Alpha. My question is, how do you see this participation progressing in the near future in 2026, if possible?
I think for something that you implied about the evolution of the stake, since we are not the owners of the stake, I think I'm simply going to echo what Andrea also has said on that. The way he and we view it is that we have an outstanding relationship at all levels with UniCredit. This is not just the top management team, but a wide array of people at UniCredit that are regularly involved with people on our sides as we're doing so many things together. We and they, we're all excited to do it because it is truly a mutually beneficial relationship, both in terms of commercial activity as well as exchange of know-how. The partnership is outstanding, and this is progressing well on all fronts.
Thus, as a result of that, both as Alpha Bank, but I think also as a country, we have welcomed UniCredit to Greece. As the saying goes, if it works, I mean, do not fix it. There is nothing more at the moment beyond the current state. All I can reaffirm is that we are deepening and broadening the things that we are doing together. There is going to be more on that that we will be able to report quarter by quarter. Okay. Okay. Thank you. Let us call it deepening, yes. My second question is on the effect of FX on loans. I think you used the phrase FX headwind in one of your slides. Can you elaborate? Sure. Yeah. I am happy to take that one.
Effectively, what we're saying is that the bank, I mean, rough numbers, has a EUR 36 billion loan book in terms of euro. On that, you should include something between EUR 3.2-EUR 3.3 billion of $USD denominated shipping loans. And obviously, interest is charged in $USD. These two metrics stemming from the balances, right, and the NII do have an impact when the dollar has weakened some 15-16%, if I remember the numbers correctly, from the beginning of the year. That is the impact that we're discussing here. Does that make sense? Yes, total. Thank you very much. That's all I have. As a reminder, if you wish to register for a question, please press star and one on your telephone. Ladies and gentlemen, we have another question from the line of Ilaya Novoselski with Bank of America. Please go ahead. Hi, hi. Thanks for taking my questions.
I have two, please. First, on your investor day that should come in Q2, if you can just give us maybe a sneak peek of what would be the main topics that would be subject to discussion. I also wanted to ask the reasoning behind the timing of the investor day because your previous one, which was in 2023, was at a time when there was a lot of change in rates, macro, and so on. Now we are entering arguably a place of stability, and you also tend to give three-year targets on your Q4 results. I just wanted to ask about the reasoning for the investor day.
Second, maybe if you can comment a bit on your loan pipeline for Q4, if you can say whether it should be stronger or weaker compared to this quarter, and whether it should be large corporates or if there are some movements more into SMEs. Also, I am seeing on slide 40, which is showing your disbursements versus repayments, that this quarter you had rather solid disbursements, but you had an increase of repayments. If there is a reasoning for that. Thank you. I am going to take the first one, Ilaya. I am sorry. I am afraid I am going to have to disappoint you. Unlike movies, we are not going to be producing trailers for the investor day. You need to hold your breath until then, and hopefully, it is going to be a nice show. No color whatsoever on what we are actually going to be publishing with the investor day.
In terms of timing, this has to do with investor relations planning and how we work internally. There is a specific cadence of events that is leading us towards the second quarter of next year, also taking into account the busy schedules that investors and analysts like yourself have. On the second question, Vasilios. Sure. Thank you, Yasuna. I mean, on the loan growth, if we start with Q3, as you rightly say, it was another strong quarter. Seasonally, Q3 is a good quarter because of the footprint of the bank. The bank typically has a much larger footprint in tourism and accommodation, and both hospitality projects and trade around these areas is picking up in the summer. Hence, we had another good quarter. To a lesser extent, just for the quarter numbers, it was construction and energy, very typical drivers of our Q3, of our quarterly evolution.
Now, when it comes to Q4, first of all, important to note that we have guided the market on around EUR 2.2 billion net credit expansion for the year. We're already there in the first three quarters. Now, when it comes to Q4, it's fair to say that we're going to be crossing our annual number, but I would be hesitant if I were you to put another EUR 600-700 million into this. The reason has to do with what we mentioned during the presentation, that there is a couple of large refinancings coming in Q4. This is a couple of transactions linked to M&A where some of our competitors opted to go a bit more aggressively in credit terms, which we did not want to go there. I would say you should not be expecting any fireworks in Q4. Still some mild positive growth.
On retail, what we have seen, which is pretty much in line with the market, is that from quarter after quarter that we had negative inflows. Q3 was not the first, but one of the quarters that we had positive inflows in all segments, both SBs, which is typically our stronger product line, but also mortgages and consumer loans. We expect this to continue as retail is turning a corner. I mean, hard to imagine $500,000,000 out of retail in the coming quarters, but still having like 50s or 60s rather than negatives is a good number for us. I'll have to disappoint you on why the repayments in Q3 are in the tune of $2,100,000,000. Let's take it offline because, honestly, I don't have it on the top of my head. Thank you.
We have another question from the line of Alberto Nigro with Mediobanca. Please go ahead. Yes. Thanks for taking my question. Good morning, all. Very two quick questions. One is on the bond portfolio. This quarter seems that the repricing of the bond portfolio has been very minimal. Can you help us to understand when we should see the better yields coming through the NII? And the second one is you can help us to understand the impact of Astra Bank in Q4 for the P&L lines and if this is included in the full year guidance. Thank you. I'll take the second one on Astra Bank. We're only talking about a bit under two months, so there's not a very big impact, and it's already included in the guidance that we have provided to the market for this year. So minor impact from Astra Bank.
Obviously, we're going to be extracting some synergies next year, and you will see a more material impact thereafter in line with the guidance that we have provided for a 5% uplift to EPS. On the first question you had on the repricing of the bond portfolio and when we expect yields to improve there, we have yet again with us our CIO, Constantinos, here to answer. Hi. You've already seen the impact from Q4 and Q1 on the repricing of our bond portfolio, and you should continue to see that all the way into 2026, not only from the investments happened this year, but the upcoming maturities, which again are going to be reinvested at 1% or higher than the current backbook yields.
Obviously, on the last quarter, we didn't make any significant investments or all our maturities, and that's why we haven't seen any significant impact quarter on quarter on that book. Thank you. 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. Thank you very much for your participation. We're looking forward to welcoming you again at the very last week of February where we're going to be releasing our full year results. Thank you very much. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.
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