Alpha Bank profit beats forecasts; to sell Ukraine subsidiary

Greece's third-largest bank Alpha swung to a net profit in the first half, helped by lower funding costs and rising income from lending.

The bank earned a net 2.73 bln euros ($3.6 bln) compared with a loss of 460 mln a year before, a result which topped an average 2.64 bln forecast in a Reuters poll and included a 2.6 bln accounting gain from its takeover of peer Emporiki.

Alpha would have swung to a profit even without the Emporiki gain, helped by lower funding costs, mainly due to reduced recourse to costly emergency funding from the Greek central bank.

Greek banks, including Alpha, resumed funding directly from the European Central Bank (ECB) in December, when the country struck a rescue deal with international lenders. ECB funding is about 2 percentage points cheaper than Greek central bank emergency funds.

Emergency liquidity assistance (ELA) from the Bank of Greece was chopped by 19.7 bln euros since the start of the year to 4 bln euros at end-June. Alpha reduced overall Eurosystem borrowing to 17.9 bln at that point, amounting to about a quarter of its assets.

Yet credit impairments continue to impact Greek bank loan books with the economy mired in its sixth consecutive year of recession and unemployment at nearly 28%, forcing lenders to take provisions for losses.

Alpha saw a slowdown in new non-performing loans, which led to a 5.1% drop in impairment provisions in the second quarter to 479 mln euros.

Loans past due by more than 90 days rose to 31.8% of its loan book from 30.1% in the first quarter. Loan-loss provisions were up 37% year-on-year to 984 million euros in the first half.

The bank said it had agreed to sell its Ukraine subsidiary as part of an increased focus on core markets for 82 mln euros, with the deal expected to close in the third quarter.