Ladies and gentlemen, thank you for standing by. I am Yoda, your Chorus Call O perator. Welcome. Thank you for joining the Alpha Bank conference call to present and discuss the full year 2025 financial results. All participants will be in a listen-only mode. 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.
Hello, everyone. This is Iason Kepaptsoglou, Alpha Bank's Head of IR. Welcome to the presentation of our full year results. Vassilios Psaltis, our CEO, will lead the call as ever with a short summary. Then it's over to Vasilis Kosmas, our CFO, for the numbers. Q&A will come at the end of the call. We should wrap up within the hour. Vassilis, over to you.
Good morning, everyone, and thank you for joining our call. Let's start with an overview of 2025 on slide four, please. For 2025, we recorded EUR 943 million profits. This is up 44% versus last year. On a normalized basis, profits stood at EUR 907 million, up 5% year-on-year. Post AT1 coupon payments, earnings came up EUR 0.36 per share, and this is up 3%. We're proud of the growth we have been able to deliver. On the one hand, we have defended against the fall of interest rates due to our prudent positioning of the balance sheets. On top, we have leveled up our fee generation capacity, enhancing our product factories.
At the same time, we have kept costs well contained as we continue to optimize the way we work, and we have managed to instigate a lower recurring cost of risk through management actions and the overlays taken at the end of the second quarter. Growth has come with solid commercial trends. As you can see, net credit expansion reached three and a half billion for the year.
This is driven by corporates. Deposits were up EUR 4 billion for the year. We have generated EUR 1.3 billion in net sales of assets under management. Asset quality was stable. Return on tangible equity stood at 11.9% on a reported basis and 13.8% based on a normalized profits, while organic capital generation reached 206 basis points.
We continue to position the business to maximize the recurring value we can create for our stakeholders in a sustainable way. That value is increasingly distributed back to shareholders, as you can see on slide five. Here you can depict that we intend to pay 55% of 2025 reported profits as an ordinary distribution, always subject to AGM and regulatory approval. That equates to EUR 519 million in distributions, which is a 6.1% yield on our current market cap.
Since the reinitiation of dividends out of 2023 profits, we have been able to increase the payout ratio from 20% to 43%, now 55%, with ordinary distributions up fourfold in EUR million terms. We intend to split the 2025 ordinary payout equally between a cash dividend and a buyback.
At EUR 259 million, this means that total cash distributions for 2025 profits will be more than 3x those of last year. Given the EUR 111 million interim dividend paid in December, the final dividend should be EUR 148 million, or approximately EUR 0.065 per share. At EUR 259 million, the size of the proposed buyback is proportional to the one conducted out of 2024 earnings. It is also in line with feedback we have received from a wide range of shareholders. In 2025, we have also built a demonstrable track record of disciplined capital deployment in inorganic transactions, as you can see on slide 6.
AstroBank added scale to our Cypriot presence, instantly positioning us as a top three bank in the country with a circa 10% market share and doubling local profitability while remaining NP neutral and CET1 light. Flexfin enhanced our data-driven factoring platform, unlocking access to small businesses and lower-tier SMEs with a strong risk-adjusted returns and EPS accretion from year one.
Axia forms the backbone of our new regional investment banking and capital markets platform, bringing market-leading advisory capabilities and immediate scale in Greece and Cyprus. All of the above transactions have now been closed, and we are progressing swiftly with full integration. We finished the year announcing one more deal, which we can look at in more detail on slide seven.
Alpha Bank has reached an agreement on the key commercial and legal terms for a transformational combination of insurance activities in Cyprus, bringing together Universal Life and Altius Insurance. The agreement comprises of two parallel steps, the acquisition of 100% of Altius Insurance and the merger of Universal Life and Altius into a single combined entity, in which Alpha Bank Group will acquire a majority stake.
To support execution and ensure continuity, we are forming a long-term strategic partnership with the Photos Photiades Group, Universal's cornerstone shareholder. The Altius management team, which has delivered an impressive turnaround in the recent years, remains fully committed, and this is materially reducing any integration risk. Completion is expected towards the end of 2026, subject to regulatory approvals. We will keep investors updated as the process progresses in line with all legal requirements.
This transaction will create one of the top three insurance group in the country, with a leadership position in accident and health, and a clear path to long-term growth. The combination creates a platform with over 400 agents and more than 100,000 clients, more than doubling our cross-selling potential for banking products and boosting our asset management revenues. It also allows us to actively shape the Cypriot insurance market, building a powerful, diversified insurance platform with strong positions across life, non-life, and health.
Universal brings an impeccable brand and deep expertise in life and health, whilst Altius contributes strong non-life capabilities, bancassurance expertise, and a high-performing sales force. The combined strengths of the two franchises unlock a clear winning proposition, a broader, more competitive product suite, a more extensive distribution network, a stronger ability to serve households and businesses, and an enhanced customer experience and digital capabilities.
These partnerships offers a rare opportunity to build the best quality insurance group in Cyprus, supported by exceptional talent from both Universal and Altius. It positions us as a major player in financial services with a scalable insurance platform, complementing our lending and wealth positions.
It reinforces Alpha Bank's enduring commitment to Cyprus, a market where we already hold a strong banking presence and see attractive macro prospects. From a financial perspective, the transaction is fully aligned with our disciplined capital allocation framework and exceeds all group level M&A criteria. It delivers an EPS accretion of circa 2%, reflecting a strong profit uplift from Cyprus, a return on tangible equity accretion above 30 basis points, and a minimal cost for equity or AT1 impact of just 23 basis points, fully consistent with our commitments.
This is exactly the type of capital light, fee-based growth we aim to prioritize, scalable, accretive, resilient, and consistent with our long-term strategy. Let's now turn to slide 8, please. For yet another year, we have delivered on our promises. Results for 2025 have surpassed our original expectations. Revenues have come in line with guidance as we have been able to counteract exogenous headwinds to our net interest income through a significant outperformance in fees.
Costs have also come in line with guidance, showing our disciplined approach to cost management. Cost of risk has been better than expected, as during the second quarter, we were able to boost management overlays on provisions, releasing future cost of risk. The bottom line is that on EPS, on returns, on tangible book value and capital generation, we have been able to surpass expectations.
At the same time, capital has been invested through value accretive M&A to boost future earnings. Let's now turn to slide 9, please. You can understand, we're going to be a bit frugal with guidance this time around, as our investor day is just around the corner. Vasilis, our CFO, will give you more details on the numbers in a minute.
I would like to highlight one or two things. First, 2025 was a fantastic year for us. We have been fortunate to produce more than EUR 940 million profits for our shareholders, but admittedly, our recurring profitability stood closer to EUR 907 million. Secondly, we need to be cognizant of the fact that 2026 is a transitional year for us.
We are razor-focused on integrating the acquired entities, but quite reasonably, we will not see the full benefit of the expected synergies from year one. The bottom line is that we expect to deliver 11% growth on normalized earnings. Credible recurring earnings growth is the natural outcome of our strategy and what we believe will continue to differentiate us going forward. The rest, I'm afraid, will have to wait until our investor day. With that, Vasilis, over to you.
Thank you, Vasilis. Hello from my side. I'll start from where you left and talk about the guidance for 2026. Then we can move to results. Starting with the bottom line, we expect EPS to reach circa EUR 0.40 in 2026. Remember that this is on a normalized basis, post AT1 coupons. To make things easier, this translates into profits of circa EUR 950 million or circa EUR 0.39 of reported EPS, in line with current consensus expectations. Before we look at the recurring side, let's keep in mind of some one-offs to take into account.
We have a voluntary separation scheme that we expect will cost us about EUR 30 million. We also need to take into account a EUR 20 million restructuring charge for AstroBank. Underlying profits are close to the EUR 1 billion mark.
Just to be clear, this is before the full phasing of synergies from acquisitions. In terms of individual components, NII is expected to surpass EUR 1.7 billion. We're cautiously assuming a three-month Euribor of 1.9%. Clearly, volumes will be a tailwind. We expect mid-to-high single-digit growth in loans, with circa 90% of credit expansion coming from corporates. We expect this growth to be funded by deposits, with no real change in the mix between time and core.
We also aim to grow the securities book closer to the 25% mark of the asset base. Together, with the EUR 1.5 billion of yield at creative reinvestments, we have the securities book will provide an additional tailwind.
The stock of time deposits will also continue to reprice towards front book levels, with a benefit of circa EUR 20 million from Q4. All in, the cumulative benefit of the APO equates to circa EUR 120 million, versus Q4 annualized NII levels, after we adjust for AstroBank. There are, however, two clear headwinds. The first is the cost of increased wholesale funding issuance as we grow the balance sheet.
The second, and equally important, is that we expect loan spreads to drift lower for the stock by another 10 basis points on account of competitive tension. Fees should land close to EUR 600 million mark versus EUR 510 million we reported for 2025. There are a couple of important things to note here.
In organic growth, mainly coming from AstroBank and Axia, should bring in about EUR 30 million more year on year. The pro forma starting base is closer to EUR 540 million, and we expect to grow that at a double-digit rate. Growth in real estate income, previously in other income, should bring in more, should bring in more than EUR 10 million year on year on account of recent investments.
The remaining EUR 50 million is split between lending and transaction banking, circa EUR 20 million on account on increased penetration and corporate related fees, as we continue to leverage our relationship with UniCredit. Growth in asset management, with EUR 1 billion of expected net sales and higher year-end balances, bringing together an additional EUR 20 million. Finally, international business and expanded capabilities elsewhere account for the rest.
Based on the above, fees should reach to above 25% of revenues. Revenues should land above EUR 2.4 billion, growing by just under 10%. Costs, we expect to extract some synergies from the AstroBank acquisition. Those are more likely going to materialize in 2027. As anticipated last year, we don't expect a repeat of admittedly stellar performance for 2025.
Underlying cost growth should revert to 3% or 4%, with a cost-to-income ratio edging towards 40. No news on cost of risk. We still expect 45 basis points going forward. Income from associates should increase to EUR 50 million. That brings the pre-tax of slightly above EUR 1.3 billion. Last, in terms of tax rate, we expect 26% going forward. Moving to results on slide 11.
Nothing notable to report in terms of one-off items, other than some tails of certain NP transactions. Reported normalized profits at EUR 237 million and EUR 225 million respectively, inching towards the EUR 250 million mark. In terms of full year numbers, as Vassilis mentioned, we have EUR 943 million of reported profits and EUR 907 million on reported basis.
This gives us a normalized EPS of EUR 0.36. Let's move to next slide and talk about the underlying results and the main P&L items. Operating income was up 12% quarter-on-quarter, largely driven by more normal quarter for trading, as well as the addition of AstroBank for two months.
If you exclude the effect of these two items, growth was still a respectable 5% in the quarter on the back of solid performance for fees. I'll get into that in a bit. Overall revenues in line with our above EUR 2.2 billion guidance. At EUR 233 million, costs saw a significant uptick versus the third quarter, due to the anticipated seasonal effects, as well as the inclusion of AstroBank.
Overall, we still landed well within our EUR 870 million guidance for the year. Not sure one can find many banks in Europe who have achieved a decrease in absolute OpEx during 2025. Impairments came in at EUR 62 million for the quarter, bringing the cost of risk to 58 base points for the quarter and 48 base points for the year, versus our 45 BP guidance.
We've already talked about profits, let's move to the next slide on the balance sheet. On slide 13, strong finish for the year for performing loans, up 5% QoQ, including AstroBank, or 3% if you exclude it. Year-on-year, that same figure came in at 8.3%, better than the original guidance. Customer funds were also up 4% in the quarter, or 1.4%, excluding the effect of AstroBank, with a year-on-year increase at 8.4%.
Tangible book value down in the quarter, but if we add the interim dividend and the amount spent on buyback, it's actually up 2.1%. On capital, we stand at 15% in terms of fully loaded CET1, down versus Q3 on account of the completed acquisitions.
Slide 15, we show the two main components of revenues. NII was up for another quarter, continuing the upwards trajectory. Most of the increase is attributable to consolidation of AstroBank. On the remainder, we continue to have good tailwinds from volumes on the loan side, while loan spreads continue to be a headwind. Most of the increase in contribution to the securities book came from AstroBank this quarter.
Deposits continue to be a tailwind on account of repricing. In funding, we have average balances for debt outstanding, where this is counterbalanced by lower costs. On the fee and commission side, I should first highlight that we have introduced a new accounting policy that looks at income from real estate separately, given it has now gained more significance in our footprint. On a quarterly basis, and again, excluding AstroBank, fees were up 19%.
In EUR million terms, the biggest delta was business credit-related fees, but we've also seen a very strong result in both asset management as well as real estate income. Moving on to slide 15, and take a look at loans and customer funds. Performing loan balances reached EUR 37.5 billion. This is up 5% on a headline basis, or 3% excluding AstroBank, with EUR 1.25 billion net credit expansion in the quarter.
Another strong quarter with EUR 4.2 billion of disbursements and a similar pattern as before, with corporates, including SME, driving growth evenly spread out across sectors. Year to date, net credit expansion has reached EUR 3.5 billion, clearly outperforming our guidance. Spreads continue to be under pressure, but we remain disciplined in our underwriting criteria.
We will avoid deals or refinancings that do not meet our own credit criteria and are not accretive to our shareholders. Earned customer funds, another quarter of solid growth, bringing the total for the year to EUR 4 billion, half of that attributable to AstroBank.
Note that most of the outflow of corporates relates to bond placement we led at the end of the previous quarter, something that we have flagged at the time. AUMs, we continue to see good underlying net sales, EUR 300 million this quarter, bringing the total for the year to EUR 1.3 billion and AUM growth to 21% once we include valuation effects. Asset quality, slide 16, with the NPE ratio flat at 3.6%. Coverage ratio has edged higher to 58%.
The underlying picture remains solid and we have no particular concerns with flows, as should be evident by the underlying cost of risk that stood at 40 basis points this quarter. We don't expect any meaningful surprises in the coming quarters, and at 48 basis points for the year, we feel comfortable with a guidance of 45 going forward. On slide 17, on capital, to finish it up.
This quarter, we had 52 basis points for capital generation organically, and this includes everything, P&L, DTAs, the usual DDC amortization, and RWA growth. This brings the total for the year to 206 basis points. As mentioned, we have increased the payout to 55%. The impact this quarter also takes into account the increase for the preceding nine months, with the total for the year amounting to 213 basis points, including DDC acceleration.
All in, CET1 ratio stands at 15% on a fully loaded basis, or 15.4 on transitional. We're also showing here on the right-hand side, the main components that bridge the 130 basis points gap to our original guidance of 16.3. 10 basis points attributable to acquisitions, 50 coming from management actions we took in Q2 on provisions, taking advantage of the positive one-offs we had, and 20 basis points as a result of the higher payout. FYI, we have also provided you with a separate slide covering the main impacts on the P&L and balance sheet from the two bigger acquisitions. Let's now open the floor for 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, 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 Caven- Roberts with Goldman Sachs. Please go ahead.
Hello. Thank you very much for the presentation. Just two questions from me, please. First on fees, and then secondly, on costs. On the fees, clearly a strong print in Q4. Could you elaborate a bit, please, on the key drivers that you see looking ahead, through into 2026, and where you're particularly focused as a management team? Secondly, on costs, could you just discuss, I mean, how you anticipate that mix of costs evolving over 2026, in particular, where you're directing that investment, whether it's in tech, personnel, other strategic builds? Thank you very much.
Thank you. Let me start with fees first. I think fees, on the fee side, there's, I would say, three engines that have driven growth in 2025, and we expect these to continue in 2026. This have to do with Assets Under Management. The very fact that we continue exploiting the relationship with UniCredit, along with the franchise, means that more and more people trust us with their investments.
We expect this trend to continue in 2026. Secondly, on transaction banking, we had a mixed effect in 2025. A stress, if you like, a headwind on retail transaction fees from the government measures, which we do not expect in 2026, as this has been already absorbed.
A headwind on corporate transaction fees, the very fact that we are able to offer solutions to our clients, which are unique, accessing all the 13 +1 UniCredit markets, which we expect to continue growing in 2026. Last but not least, real estate. This is something that we have invested heavily during 2025. As I mentioned, there's another EUR 10 million coming out from this line, even on the investments that have already been completed in the 2026 numbers. Going to the costs side.
I think we mentioned quite a few times in the past that Greek banks do face service inflation, both in staff costs and G&A that have to do with main suppliers. This inflation is somewhere in the tune of 6%-7%. I think this is very similar to what our peers have been showing.
In our case, we have been managing to drive this down to zero this year, or let's call it 3%-4%, our guidance for next year. The way we do that is we actively manage the refreshing of personnel through voluntary exit schemes. A reminder, we're already underway for one a month ago.
Secondly, on the technology side, we're investing in new applications, but at the same time, we're very active in discontinuing the legacy applications, hence, not carry the burden of maintaining the old applications. These are the drivers who we feel will keep containing this line to 3%-4% over the planning horizon.
Thank you very much. As a reminder, if you would like to ask a question, please press star and one on your telephone. As a final reminder, to register for a question, please press star and one on your telephone. 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.
Great, thank you. Short and sweet, as I would, prefer it on a Friday. Everybody, enjoy the weekend. I know it's been a long reporting season for everyone, we're gonna come back to you soon with the dates on the Investor Day. 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.