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Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) Strong Performance in 3Q2014

Despite difficult macroeconomic environment, Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) reported a stable 3Q2014. It passed the ECB’s stress test and also achieved its important milestones of full privatization and financial recovery in the quarter. The tangible equity financing amounted to €8.2 billion, resulting in a book value of €0.64 per share.

Reliance on ECB funds

Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) is in compliance with the induced norms of the Basel III agreement with respect to its ‘Tier 1’ needs of core capital. It reported that reliance on ECB’s funds declined to €7.9 billion. It is the lowest level since 2009. It also expanded its capital baseline in the quarter. The cost-reduction measures resulted in strong financial performance in 3Q2014. Improving macroeconomic conditions will help the bank on its way towards recovery. In such a scenario, it will be able to post positive net income in coming quarters.

Economic outlook

With exports and private consumption rising, Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) forecasts overall economic growth to be in a range of 2.5%to 3% in Greece for FY2015. The government is pondering over reforms and measures with the Troika to secure credit lines from EU. The labor market reforms and the personnel in the public sector will play an important role. If economy improves, Greece will be able to end its dependency on the IMF, and will be in a strong position to pay back the debt. This macro data will yield positive results for Alpha Bank. It will directly benefit from economic recovery in Greece.

The other details

The management of Alpha Bank A.E. (ADR) (OTCMKTS:ALBKY) talked about dividends, which as of now are banned. The financial crisis has damaged structure of bank. However, if the condition improves in 2015, the management will talk about removing the dividend ban with the political authorities. Also, the management said that it is not concerned about the probability of advanced general elections that can occur if Greece opts for a third bailout plan.

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