Alpha Bank reported a net loss of 10.4 million euros

Alpha Bank <ACBr.AT>, Greece's third-largest lender, on Thursday reported a net loss of 10.4 million euros, including a one-off tax, as the debt crisis and recession led to higher provisions and weak loan growth.

Alpha said that excluding a 61.9 million euro one-off tax, net earnings fell 39.5 percent year-on-year to 51.6 million euros ($63.2 million), coming in above market expectations.

Analysts were expecting net profit of 43 million euros on average, with estimates ranging from 33 to 61 million.

"While our balance sheet is low risk, with measured sovereign exposure, and our asset base well collateralised, we will continue to focus throughout the year on shielding Alpha Bank from contagion of the sovereign debt crisis and to deliver on our key priorities," said Chief Executive Dimitris Mantzounis.

Greek banks <.FTATBNK> have underperformed European peers <.SX7P> since the start of the year, shedding 38 percent, as an austerity-induced economic downturn weakened demand for credit and led to a rise in non-performing loans.

The country's debt crisis, which sparked contagion fears and roiled the euro, has hurt banks through higher funding costs, a squeeze on margins and trading losses tied to their government bond holdings.

Alpha Bank which is also present in Bulgaria, Romania, Serbia, Cyprus and Albania, said net interest income rose 13 percent to 455.8 million euros, with net interest margin resilient quarter-on-quarter at 2.6 percent.

Provisioning for impaired loans rose 27.2 percent to 200 million euros as non-performing credit increased by 60 basis points to 6.3 percent of the loan book.

Lending grew 2.3 percent to 53.3 billion euros, with volumes expanding by 2.5 percent in Greece and by 3 percent in southest Europe.

The bank said its Tier 1 capital adequacy ratio stood at 11.5 percent at the end of the first quarter.