Ladies and gentlemen, thank you for standing by. I am Yota, your call's call operator. Welcome, and thank you for joining the Alpha Bank conference call to present and discuss the nine-month 2026 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.
Hello, everyone. I am Iason Kepaptsoglou, Alpha Bank's Head of IR. Welcome to the presentation of our third quarter results. As you can imagine, this time the call will be shorter, as we have our Investor Day coming up next week. Today we will be focused only on this quarter's numbers. We will have an opening statement from our CEO, Vassilis Psaltis, and then our CFO, Vasilis Kosmas, will go through the numbers for the quarter. Q&A will come at the end, and we should wrap up well within the hour. Vassilis, over to you.
Thank you, Iason. Good morning from my side as well, and thank you for joining today's call. Vasilis, our CFO, will be doing most of the talking today, so just a brief comment from my side. If we may go to slide four, please. 2026 is shaping up to be another strong year. Reported profits are up 8% versus last year, while on a normalized basis, we are up by 14%. Our NII is up 11% versus last year, as we continue to benefit from the growth in the loan book. This quarter has been exceptionally strong, and it is the highest figure we have had in nearly nine years. Fees are up by 32% on a headline basis, or 25% excluding dividends from our participation in PRODEA. The investments we have made in the business and our bolt-on M&A strategy continue to bear fruit.
Our cost-to-income ratio remains solid, and at 38% for the first nine months, is well within guidance, showing the operating leverage that our business has. At 42 basis points, cost of risk continues to reflect solid asset quality underlying trends. Performing loans have retained their double-digit growth rate, and we are on pace to meet the upgraded guidance we provided at the second quarter results. Customer funds have jumped 19% versus the previous year, with this quarter showing strong inflows of deposits and positive net sales of AuMs. Plus, our organic capital generation has come in at 50 basis points, while our tangible book value is growing at a strong 11% rate. We continue to navigate a complex and uncertain broader macroeconomic environment, but we are also well-prepared. Our capital position is sound, our provisioning is prudent, and our funding base is solid.
Greece itself occupies a different position to much of the rest of Europe right now, with a strong fiscal trajectory, declining public debt, and an investment pipeline that continues to expand. Taken together, this gives us confidence for the foundations for the next phase of Alpha Bank's growth that are firmly in place. Vasilis, over to you.
Thank you, Vassilis. Hello from my end as well. Let's start with the P&L on slide six please. Reported profit for the quarter was EUR 269 million. Just to refresh your memory, Q2 was positively affected by a large one-off recognition of deferred tax asset, so that explains much of the headline move. On a normalized basis, profits stood at EUR 283 million and are up 3% quarter-on-quarter. In terms of one-off items, evidently not much to report this quarter. There's a small EUR 5 million donation to the Greek Universities Revitalization Program, and then some bits and pieces for Katseli loan and CHF loans perimeters, where the impacts have been finalized. In particular, with CHF loans, we had a EUR 20 million perimeter where we took an impact of 20%, already fully provided, and now we have a remaining EUR 55 million position with a provision coverage circa 30%.
The EUR 25 million impact from the donation of school renovations, the so-called Marianna V. Vardinoyiannis program, will likely come in in Q4. With that, let's move to the next slide and look at the underlying results. Operating income increased 1% quarter-on-quarter. Both net interest income and fees grew at a solid pace. Trading and other income was somewhat lower than our expectations. This is not due to lower client activity, bar the usual lower summer seasonality, vis-à-vis brokerage, but instead should be attributed to our ALM portfolio management, where we continuously assess opportunities to recycle the securities book against the value of retaining attractive carry. This quarter, the economics favored carry over crystallizing gain. On costs, again, we had a particularly good quarter. Cost to income stood at just 36% for Q3, with the move versus last quarter mainly attributable to the second quarter bonus expense.
We'll talk about guidance at the end, but just as a note, we do expect a seasonal upswing in Q4. Another good quarter for provisions, despite the overall external macro uncertainties. This has not yet surfaced in our loan book in any material manner. Turning to the balance sheet, a fairly strong Q3 for loans, with EUR 400 million of net credit expansion, and the book up 1% versus Q2. We remain very much on track to reach our full-year guidance. As a reminder, that would require circa EUR 600 million of net credit expansion in Q4. For customer funds, we have had good growth in the quarter, with some headwinds from our Greek custodian portfolio valuation effects. This did not have and will not have any meaningful impact on our asset management fees.
Tangible book value up 5% in the quarter and 11% year-on-year when adjusting for distributions. On capital, our CET1 ratio stands at 14.5%, up 20 basis points versus Q2. Slide nine for the two main components of revenues. Net interest income up by an exceptional 8% in the quarter, circa EUR 5 million attributable to the extra calendar day that we have in Q3. A good part of the uplift comes from the loan and securities volumes on account of the growth we had during previous as well as this quarter. Another part comes from higher deposit volumes, mainly on the corporate side. That has an impact on the mix and thus the average cost. However, as you can see later in the presentation, the overall beta of our Greek deposit book hasn't much changed.
Reason is that we have benefited on the retail side from a mismatch between sharp increase in rates and longer duration of retail term deposits. All in, we're seeing the cumulative impact of two separate things here. Number one, higher volumes on loans, securities, and deposits, and overall having a positive impact on our NII. Number two, even though our sensitivity to change in rates has not much changed, the way it propagates through the balance sheet, given the pace at which rates have come up, means that we're seeing a bigger benefit to start with. This benefit would fade away as time goes by and retail term deposits revert to more normal levels as possible. Bottom line, good news for NII overall, with some better news in the near term. Switching to fees, a more straightforward story and a strong quarter overall.
Asset management reverting to a solid trend and a record quarter, crossing the EUR 14 million mark. Softer quarter naturally for investment banking and business credit-related fees, as activity has softened after a very strong start to the year. Last but not least, with no dividend from PRODEA this quarter, I think it's the first time we're seeing the underlying revenue generation from the real estate book in a very clear manner. Moving on to slide 10 to look at loans and customer funds. Performing loan balances now past the EUR 40 billion mark, up 1% in the quarter, EUR 400 million in net credit expansion. Naturally, a slower quarter for disbursements at EUR 2.8 billion, given a quiet summer season, with repayments also a bit to EUR 2.5 billion following a strong second quarter. Q3 was a more interesting quarter for customer funds. Deposit growth this quarter mainly coming from corporate deposits.
There is an element of seasonality in this, but in earnest, we seem to be outperforming our expectations on this front. On AuMs, another strong quarter for net sales, EUR 400 million, taking the year-to-date figure to EUR 1.1 billion, just above the guidance for the year. Then, given the market volatility, we've seen a significant EUR 1.4 billion negative valuation effects that relate to equities under custody, so not really impacting our recurring business. Turning to slide 11 on asset quality. NPE ratio came in at 3.8%. There's a small increase in the stock of NPEs coming from two items. One is a large European corporate syndication that has been restructured and provisioned in our part, so we would expect to cure in a relatively straightforward way.
And then, as in previous quarters, we're nearing the end of a process with regards to reprofiling mortgages, so that has had a small incremental impact this quarter. Coverage ratio edging down to 52%, mainly as a result of the low-risk nature of the exposures flowing into the NPE perimeter. That is also reflected in the underlying cost of risk, which stood at 32 basis points this quarter. Overall, the picture looks okay despite jitters in the market. Then on slide 12, on capital, to wrap it up. All in, CET1 ratio stands at 14.5% on a transitional basis. 124 basis points of organic capital generation in the first nine months of the year. As we highlighted during the last results call, we have seen a positive impact from the new synthetic securitization this quarter, increasing CET1 by 17 basis points versus Q2.
No impact from the volatility in the bond markets, as our securities book is predominantly booked at amortized cost. Our fair value through OCI book accounts for just 7% of our total book, and thus produces very low capital volatility. Then we also have the payout accrual at 55% of reported profit, with DTC acceleration coming on top. This translates into circa EUR 420 million accrued towards distributions so far this year, and we intend to distribute circa EUR 124 million as an interim cash dividend in early December. Lastly, from my side, an update for the guidance for the year. Let's take things one by one. I think we should be clear that we're outperforming our guidance on NII. As a result, we now expect EUR 1.8 billion of net interest income in 2026. Our guidance on fees is unchanged at above EUR 600 million.
As a reminder, that excludes the EUR 40 million benefit we had in Q2 from PRODEA, so the figure we will post will be closer to EUR 640 million. We're not changing the guidance on other revenue, so the EUR 15 million upgrade to NII translates to total revenue guidance up to EUR 2.5 billion. On costs, no change. We still expect to land at EUR 960 million for the year. As discussed, there will be a seasonal step-up in Q4. As a result of the uncertainty in the macroeconomic environment, we will re-examine our models at Q4, as is customary. Hence, there is a chance that our cost of risk for the year will land above 45 basis points.
There's no real change to the rest of the line, so our full-year guidance of EUR 950 million in reported profits is reiterated, and so is our guidance for EUR 0.41 of EPS. Just a health warning before we jump into Q&A, given we have Investor Day in less than a week, we will refrain from providing any further guidance on the outlook, near term or longer term. With that, let's now open the floor to questions.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who has 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 Noemi Peruch with Morgan Stanley. Please go ahead.
Good morning. Thank you for taking my questions. I have a few on deposits and asset quality. We have seen that in Q2, and to a lower extent also in Q3, Greek companies are holding liquidity for investments. Can you please indicate the size of the corporate deposit that you see as more volatile, and would you expect deposit growth in 2027 despite this dynamic? On asset quality, you mentioned also the restructuring of mortgages, and this has been going on for quite a while, and I was wondering when do you expect this to end? If I am not mistaken, you sold EUR 200 million of NPLs in Q3, and I was wondering if the EUR 2.1 billion of Stage 3, it is already net of this EUR 200 million. Thank you.
I will start with the last question, and I will leave Vasilis Kosmas for the rest. There has not been any transfer out of the loan book for any transactions. I think you are either referring to something historical or something else. We can take it offline, but there has not been any impact from any sale this quarter. Vasilis, on the deposits and on the reprofiling loans.
Thank you, Iason. Let me start with the asset quality, just to continue from where Iason left. It is true we have started this process round about early 2023 to reprofile mortgages. With regards to the timing, we are very close to closing this process, I think, by Q4 or latest early Q1 into 2027. This is a process that will end on modification of these loans. I think very important to note, though, the fact that much of the work has been done, so there is much lower volumes that we are currently doing these quarters than previous quarters. More importantly, this has zero impact, zero, I repeat, on cost of risk. Just to give you a sense, this quarter we had a EUR 6 million modification loss from these exposures that we modified, which was already accounted for four, five, six quarters ago.
Zero impact on our cost of risk for the quarter. On deposits, you are right to say that deposits that are coming in are more corporate deposits than retail. Some of them are coming through rights issue that Greek companies have been making in Q2, but the vast majority of these are coming from regular business clients, shipping, infrastructure, power, and utilities. These remain primarily on term deposit basis and are likely to remain. We do not see any outflow of deposits in the near term. As such, although I do not want to discuss too much about 2027, this is not something that particularly concerns us when we look into the future outlook.
Thank you very much. If I may, just a follow-up on the fact that higher NPLs do not have an impact on cost of risk. I do see at the same time that Stage 3 coverage is going down. What I see is around 23% this quarter. Is it a level you are comfortable with, or could you kind of see that going up in Q4 or in the future? Thank you.
When it comes to current flow, yes, we are comfortable with. For example, as I mentioned, these modifications had zero impact on our cost of risk. So obviously, as the mix is changing, and we have new, already provided flows, our cost of risk is going down, and we are very comfortable with the current levels of provision coverage. What I mentioned about Q4 or in the future is that we are living in a more volatile world than several quarters ago. So, that may require some adjustments in our model in Q4, but this is not linked to flows or what we currently see on our day-to-day business.
Thank you.
The next question comes from the line of Gabor Kemeny with Autonomous Research. Please go ahead.
Good morning. Just to pick up on the previous point, can you elaborate a bit on the nature of the model adjustments that you are expecting to make in Q4? Another one on asset quality would be on the restructuring of the European syndication. Can you give us any further color on this book, its quality, and the likelihood of recurrence of such charges linked to restructuring cases? The final question I have is on net interest margin, actually, which expanded very nicely, and you talked a bit about the timing effect of repricing of your term deposits. Can you share possibly the magnitude of the catch-up you expect in term deposit pricing and how we should think about your NIM going forward? Thank you.
Thank you, Gabor. Let me start with the restructuring of this single ticket. This was practically a EUR 3 billion syndication. I think the whole syndicate was more than 15, 20 European banks. Effectively, they have reprofiled the loan, so I presume every bank in Europe, including us, took the modification loss. We believe the loan is fully paying, so they have never stopped paying interest and capital, and we believe it will be cured in the coming quarters. When it comes to the nature of PMAs, I think what we should all appreciate is that even though the base case scenario for Greece hasn't changed, tail risks in Europe have increased. There is volatility in the European markets. You can see that, and we cannot assume that Greece is going to be immune out of that. The process of looking into the PMAs has not been completed.
It's something that will happen in Q4, and we will assess the impact at that time. If I understand well your questions on NIM, you were trying to assess what is the likely trajectory of NIM in the next quarters and in the next years. I think we should start by saying that we are very happy with the NIM that we currently post in our books. Mind you, compared at least to our peers, this is a bank with much less core deposits, and we're posting NIM which is bang on same as some of our peers. We're very happy with this result. When it comes to future trajectory, hope you will be able to wait for another week, where we can give you more guidance on that.
Yeah, maybe you could give us a. Thank you for all the comments. Maybe you could give us a sense of where you are pricing term deposits currently, if that's possible.
Sure. I think we have it in the presentation. Our time deposit pass-through is 65% or 66%, if I remember it on top of my head. Let me see where we have that. Give me just a sec. Yeah. So, page 19 of the presentation, our deposit pass-through is 66% right now.
Okay, thank you.
The next question comes from the line of Mehmet Sevim with JPMorgan. Please go ahead.
Hi. Thanks very much for your time. I just wanted to follow up on the NII point, and specifically, when I look at the breakdown, it seems the bond portfolio yield has increased significantly this quarter, or the income coming from it. Is that a timing effect from the second quarter growth in the portfolio, or is there anything else, please, behind that? Should we assume, based on your guidance, that NII doesn't grow meaningfully in the fourth quarter, say EUR 475 million or so, to reach your guidance, or is that around that number that you previously provided for this in terms of guidance? Thanks very much.
Sure. Thank you. On the securities book, I think you're right. It's more a matter of the fact that average volumes in Q3 picked up on account of purchases that we have done at the end of Q2, plus some smaller reinvestments that was done in Q3. So, it's more a matter of volume rather than repricing. I think I missed your second question, so please
On the NII question, I think we've given guidance of EUR 1.8 billion. That's not necessarily EUR 1,800. So, we'll need to get to Q4 to see more details on exactly how NII is going to shape up.
Okay. Thanks very much.
The next question comes from the line of Ben Maher with KBW. Please go ahead.
Hi. Can you hear me?
Yep, we can hear you well.
Great. I just got a few follow-up questions on NII, and I appreciate perhaps you have to wait until the CMD to answer some of these. But just on the looking at the breakdown of NII during the quarter, it looks like the funding and other kind of residual line in that was broadly unchanged, but I am just interested to see how you feel that wholesale funding costs going forward are going to evolve. Obviously, you are arguably more geared to that than some of your peers. That is my first question. The second question is looking at the deposit spread during the quarter, and also your lending spreads, they actually were flat to slightly down Q on Q. Just interested, the drivers of that, again, some of your peers have seen expansion in spreads from rates going up.
My final question is just on the rate assumptions that underpin that EUR 1.8 billion upgraded guidance. Appreciate you might want to wait until the CMD to give color around that, but thought I would ask anyway. Thank you.
I will unfortunately take all three of those. On the rate assumptions, you are indeed correct. You will need to wait a few days to see what is in the plan for the next couple of years. We do not want to preempt any of your expectations. On deposit spreads, I think that you need to look at methodology versus peers when making comparison. As we have said in the past, the spreads that we are providing are point in time versus the relative Euribor rate. So, it is not the overall yields on cost of the deposit book minus three-month Euribor. We go based on each tenure and the exact rate that was issued at the point of time. In practice, what you are seeing from a conceptual perspective is that rates have gone up quite quickly.
The time deposit book has not repriced because it has a longer duration, so you could consider that to be an expansion of spreads. On wholesale funding, a backward-looking picture is that the spreads that we pay for wholesale funding has improved, as it has naturally for all Greek banks, given the improvement in the environment. The size of wholesale funding has increased because our book is growing, our loan book is growing, so we need to fund that. For anything that relates to the future, again, unfortunately, wait a couple days.
Great. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. As a final reminder, if you wish 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.
Well, thank you very much for attending our call, and we are very much looking forward to be again with you next week on our Capital Markets Day. Thank you very much, and looking forward.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a nice day.