The roadmap for the strengthening of Alpha Bank at all levels was presented on Monday by CEO Vassilis Psaltis, after the announcement of the bank that it is proceeding with a capital increase of 800 million euros.
We are talking about the project codenamed “Project tomorrow”, the main objectives of which are the complete consolidation of the bank’s balance sheet, enhancing revenue and profitability and finally the distribution of dividends from 2023 to its shareholders.
Specifically, with its completion by 2024, the following is expected to be achieved:
Annual net profits of 600 million euros
Yield to tangible book value at 10%
Reduction of non-performing loans ratio to 2%
The whole plan
To achieve these goals, Alpha Bank’s plan consists of 5 main pillars:
Reduction of NPLs
Based on the revised plan to reduce red loans, by the end of 2022 transactions of 8.1 billion euros will have been made, reducing the NPE index to 5%.
An additional 1.1 billion euros will be traded by 2024, reducing the index to 2%.
Rationalization of operating costs
The goal is to reduce operating expenses by 15% by 2024, so that the cost-to-income ratio falls below 45%.
This will be possible by reducing the cost of core activities, but also by reducing by 75% the management costs associated with NPLs
Increase in revenue from fees and commissions
Their annual growth rate is projected until 2024 of the order of 9% of income from fees and commissions, with significant support from sales in the field of investment management and insurance products.
Revenue boost by increasing assets
The goal is for the net new loans, under the Recovery Fund, to reach 10 billion euros by 2024, leading to an increase in the bank’s assets and net income.
Development of international activities
Great emphasis is given to the development of activities in the Romanian market, where Alpha Bank has a presence, as the percentage of loans in terms of GDP in the country reaches only 24% compared to 79% in Greece.
In this way it is estimated that the group’s revenues from abroad will correspond to 10% of total revenues, having a catalytic effect on its profitability.
NPEs trades
According to the bank’s presentation, the transactions through which 8.1 billion euros of non-performing loans will be derecognized are the following:
Cosmos: 3.50 billion euros – Completion of the second half of 2021 (securitization)
Orbit: 1.30 billion euros – Completion of the second half of 2021 (sale)
Sky: 2.20 billion euros – Completion of the first half of 2022 (sale of loans in Cyprus)
Solar: 0.4 billion euros – Completion of the first half of 2022 (securitization)
Other transactions: 0.7 billion euros – Completion of the first half of 2022
Digital transformation
Alpha Bank’s plan also envisages significant investments in IT infrastructure, with the aim of increasing online sales. This will reduce operating costs and free up human resources for its use in promoting high value-added products for the bank. For this reason, the project budget envisages investments of 270 million in digital infrastructure. Thus, it will be possible for even a loan to be approved exclusively through electronic transactions.
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