SuccessfulSuccessful DeliveryDelivery inin aa De-leveringDe-levering EnvironmentEnvironment
Marinos S. Yannopoulos Board member, CFO
UBS Global Financial Services Conference New York May 2008
1 Table of Contents
Contents Pages I Alpha Bank at a Glance 3
II Developing into a Regional Powerhouse 7
III Successful Delivery in a De-levering environment 15
IV Closing Remarks 22
This presentation contains forward-looking statements, which include comments with respect to our objectives and strategies, and the results of our operations and our business, considering environment and risk conditions.
However, by their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. The risk exists that these statements may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause future Group results to differ materially from these targets.
Forward-looking statements may be influenced in particular by factors such as fluctuations in interest rates, exchange rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political, regulatory and technological conditions. We caution that the foregoing list is not exhaustive.
When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events. 2 I. Alpha Bank at a Glance Alpha Bank at a Glance
Overview Customer Financing
(€ bn) 23% Founded in 1879 by the Costopoulos family CAGR 42.9 which today controls 11% of the Bank
21 Consistency in management ensuring firm Medium & Large 23.1 implementation of Alpha Bank’s strategy Businesses 11.3 21.9 A leading franchise in Greece Retail 11.8
Dec. 2004 Dec. 2007 9 3rd largest branch network with 411 branches Customer Assets 9 €34bn of customer loans, equivalent to 15.1% (€ bn) 11% market share CAGR 46.7 Other 12.3 customer 34.2 9 €28.8bn of customer deposits, equivalent to assets under 9.5 12.7% market share management 34.4 Deposits 24.7 Rapidly growing presence across SEE Dec. 2004 Dec. 2007 9 €7.6bn of customer loans, up 88% y-o-y, Net Profit translating into a 7.3% market share (€ mn) 28% 850 CAGR 9 Out of 403 branches only 237 have reached
mature equivalent sales capacity 408
9 Significant presence in Romania and Cyprus
Current market capitalisation of € 9.1bn Dec. 2004 Dec. 2007
Note: Financial information as of 31st December 2007. Market capitalisation as of 5 of May 4 Clear Strategic Profile
Growth with Profitability
Greece: Retail Greece: Business SEE
Focus on high profitability Further expand existing Emphasis on organic growth; segments leadership position selective acquisitions
Expand the branch network Enhance client penetration Continue delivering market share gains Focus on multi-channel Continue offering of integrated distribution products Implement successful domestic know-how Targeted expansion of the SME segment
Effective cost management
Sound credit risk
5 Focused Geographical Footprint
Greece
2004 2007 CAGR
Ukraine Branches 388 411 2% Loans (€m) 20.6 34.0 18%
Deposits (€m) 22.3 28.8 9%
Operating Income (€bn) 1.4 1.9 11% Romania
Serbia
Bulgaria
FYROM
Albania
Greece Contribution to SEE Group
Cyprus 2004 2007 CAGR 2004 2007
Branches 67 403 82% 15% 50%
Loans (€bn) 1.9 7.6 59% 8% 18%
Deposits (€bn) 2.1 5.3 36% 10% 15%
Operating 146 346 33% 9% 15% Income (€m)
Note: Financial information as of 31st December 2007. Market capitalisation as of 26 March 2008 6 II. Developing into a Regional Powerhouse Clear Strategic Choice to Transpose Our Quality Greek Franchise into SEE
The Leading Greek Franchise… …Transposed into SEE
“Quality bank” reputation with First phase of network roll-out leading positions across products completed
2.5m upper-end retail customers Nationwide visibility of Alpha Bank brand Blue chip corporate and SME client base Full service banks in place with strong headquarter support Consistently prudent risk policies Strong receptiveness to retail Operating and capital efficiency offering focus On track for >12% market share in 2010
8 Leadership Position in Greece with Deepening Client Relationships
2001 – 2007 Market Share Gains
Ranking Dec. 07
Busine ss 16.5% Lending #1 Consistent shift to retail supported by significant market share gains
Mortgages 9.5% 14.2% #2
Consumer 10.0% 13.1% Credit #3 Fair market share of 15%-17% across customer segments Mutual Funds (excl. Money 15.7% 20.3% #2 Market)
9 Achieved Critical Mass in SEE by Building a High Quality Branch Network in Less Than Two Years
Branches Highlights
403
133 #3 bank in Cyprus, increasing market 270 share by 2.1 pps since last year 176 94 20 67 89 #5 bank in Romania with excellent brand Dec. 04 Dec. 05 Dec. 06 Dec. 07 name reception Openings Jubanka
Loans Market Share Gains (Dec. 06/Dec. 07) Following comprehensive restructuring
# Ranking by loans Serbia is set for strong growth by building on its 265,000 active customers #3 #5 #8 #9
12.3%
10.2% 6.5% 5.7% Bulgarian green field exceeding 3% 3.4% market share in less than two years 4.3% 4.5% 1.7% Cyprus Romania Serbia Bulgaria Market Share Gains As of Dec 06
10 Alpha Bank has Delivered Across its Strategic Pillars
Greece – Retail Loans1
CAGR: (€ billion) 23% Successful shift to retail 18.4 banking 15.5 12.7 Retail to total Greek loans 9.9 increased from 49% to 55%
Dec. 04 Dec. 05 Dec. 06 Dec. 07
SEE – New Loan Balances
x% SEE/Greek new additions 64% (€ million) x 7.5 3,544 New loan disbursement levels seven times higher
20% Already more than half of 1,092 472 Greece’s new customer loans
2004 2006 2007
1 Parent data 11 Strong Financial Performance Track Record
Net Income and ROE
(€ million) x% ROE 28% 27% 23% >20% year-on-year 850 22% 626 EPS growth 502 408
2004 2005 2006 2007 Increasing returns on an actively managed capital Cost/Income base
51%
47% 46% 46% Strong efficiency gains despite SEE investment
2004 2005 2006 2007
12 Increase of Branch Network by 30% Across Greece and SEE
SEE Branch Network Deployment
830 x 3.5 1,010 Acceleration and 166 240 enhancement of 216 237 branch opening 225 schedule 403 770
Dec. 07 2008 2009 2010 Dec. 10 Fourfold increase in sales capacity as Greece Branch Network Deployment network density accelerates maturity
536
25 50 86
411 50 30% more branches to accelerate 450 consumer & SME market share gains
Dec. 07 2008 2009 2010 Dec. 10
Agenda 2010 Agenda 2010 Updated Mature Branch Equivalent
13 Accelerated Investment Increases Shareholder Returns
Net Income
(€ million) % ROE 30%
> 1,400 1,150 27% 23% EPS CAGR 07-10 626
2006 2009 2010
SEE Profit Before Tax
(€ million) ~ 550
150 SEE ~30% Group PBT 400
36 117 70
2004 2006 2007 2010
14 III. Successful Delivery in a De-levering Environment Key Challenges for European Banks
Key Themes
European banks have become more reliant on wholesale funding (loan/deposit ratio of 1 145%1 in 2007 vs. 139%1 in 2005) Loss of investor’s confidence in the markets has led to constrained liquidity in interbank Funding markets (spreads2 have increased by approximately 70bps since July 2007) As a result, wholesale funding costs have significantly increased (115 – 125bps funding for a 5-yr senior unsecured issue of a AA- rated bank vs. pre-volatility level of 8-10bps)
Risk provisioning still close to historic lows but expected to deteriorate (42bps in 2006 vs. 2 46bps in 2008E), coupled with decline in Euro area GDP growth expectations since early 2008 (1.9% today vs. 2.3% a year ago) Asset Quality Continued uncertainty about full extent of write-downs, e.g. legacy assets, AFS securities, with significant repercussions on new loan development (estimated write-downs so far of c. US$200bn3, total expected write-downs of US$400bn3)
3 EU banks more highly geared than US commercial banks (equity / assets ratio of 5.5% in Europe vs. 10.1% in the US)
Average disguising wide range of differences across Europe, with core Tier 1 ratio ranging Capitalisation between 4.5% and 10.2%
Continued uncertainty with respect to “true” book value (European banks trading close to historic P/BV lows)
Source: Bloomberg, ECB, Merrill Lynch Research (1) Excluding Germany, based on ML estimates for covered European retail banks (2) Spread between 3M euro generic government bond yield and 3M interbank interest rate (3) Source: Meeting of G7 finance ministers in Tokyo in 2008 16 1 A Robust Retail Deposit Gathering Franchise…
Customer Assets Alpha Bank Domestic Deposits / Branch
(€ million) Proven deposit gathering track record in Greece 9 Extensive nationwide branch network
9 Almost 10% higher productivity compared 68.6 70.0 64.3 to peers 60.8 9 Amongst the highest sight and savings deposits per branch Dec. 05 Dec. 06 Dec. 07 Dec. 07
1 9 125 new branches by 2010 Alpha Bank Average for Greek Banks
Expansion into SEE at a very early stage Branches Growth 9 Deposits penetration will accelerate as branch network matures 23.8% CAGR 08-10 1,546 9 607 new branches by 2010 1,355 1,089 9 Relatively low deposit penetration 814 1,010 844 628 403
411 461 511 536
Dec. 07 Dec. 08E Dec. 09E Dec. 10E
Gre ece SEE
Source: Company data (1) Average includes NBG, Eurobank, BoP, BoC (Greece), MPB (Greece) and Emporiki 17 1 … With a Well Diversified Funding Mix
Customer Assets Cyprus Deposits Evolution
(€ million)
Strong Deposit gathering franchise in 31.4% Cyprus CAGR 05-07 3,080 1,224 9 7,000 offshore customers 2,171 1,690 1,357 936 9 Intense marketing efforts built on our 662 geographic presence; representative office 565 1,856 1,235 in Russia; retail network in 6 SEE 792 1,028 countries; UK Dec. 04 Dec. 05 Dec. 06 Dec. 07
Diversified funding mix Dom e s tic Offshore 9 First Greek bank to establish an EMTN in 1999 Funding Base1 9 Raised more than €1bn ytd in wholesale funds Regulatory 9 No securitisations so far; totally Capital, 11% Savings unleveraged balance sheet and Sight Senior Deposits, Additional wholesale sources Bonds, 17% 34% 9 ECP programme 9 Covered bonds 9 US MTN programme
9 Consumer credit securitisation Time Deposits2, 9 Redeemable preference shares 38%
Source: Company data (1) Excludes interbank and other liabilities 18 (2) Includes Alpha Bank retail targeted bonds 2 Credit Risk Firmly under Control…
Group Impairment Losses (% of avg Loans)
100 4.2% 4.0% 105 4.0% 83 No subprime or related investments 85 3.8% 60 65 3.0% 45 2.0% 25 1.0% Significant improvement in credit quality 5 since 2005 mainly due to -15 2005 2006 2007 0.0% – Stringent, consistently applied credit risk Impairment Losses (bps) Real GDP Growth (%) underwriting criteria – Re-engineering efforts across the credit Group Loans in Arrears (IFRS 7: Past Due >90 days) value chain 5.1% 4.8% – Write-offs of € 754mn over past two years 4.4% 3.7% 3.9% – Benign environment for business lending
Impairment losses (% of avg RWAs) Loans in arrears at 3.7%, below market Dec. 06 Mar. 07 Jun. 07 Sep. 07 Dec. 07 (bps) average of 5.1% Composition of Group Coverage
Adequate asset quality coverage ratios, 135% 131% i.e. 130% including collateral 78% 78% Collateral
Loan Loss Reserve 57% 53%
2006 2007
Source: Company data, EIU 19 2 … Endorsed by Recent Upgrade by S&P
Portfolio Structure
Transportation Well diversified loan book 4% Trade 15% Tourism 5%
Construction / 9 Leadership in business lending builds on Real Estate 9% consistently prudent underwriting Industry 12% Shipping 3%
9 Inroad into retail and SEE allows for Other 13% balanced loan book
M ortgages 9 No sectoral or single name concentration 27% Consumer Credit 12%
One of very few banks to be upgraded by Ratings Upgrade History S&P to A- within an adverse market
environment A-
BBB+ BBB BBB- A1
A3 Only Greek company to consistently pay Baa1 dividends post World War II Baa3
1995 1997 1999 2000 2007 2008
S&P Moodys
Source: Company data, EIU 20 3 Capital: Acting from a Position of Strength
Capital Adequacy Ratios
12.9% 12.5% >12.0%
10.5% 8.5% 2.7% 2.9%
2.1% 1.8% 3.1% 1.5% 1.0%
Tier I: > 8% 8.1% 7.8% > 7.0% 6.4% 7.0%
Dec. 01 Dec. 06 Dec. 07 EU Average Dec. 07 Target Dec. 09
Equity Capital (Core Tier I) Hybrid Capital (Lower Tier I) Subordinated Capital (Tier II) % Total Capital Adequacy Ratio
Risk Weighted Assets Considerations
(€ billion) 20% Limited Goodwill on books of only €109mn; Equity of CAGR 07-10 €3,371mn Alpha Bank better capitalized relative to the EU retail banks ~ 70.0 28.2 33.5 40.4 9 Core Tier I at 7.8% in 2007 well above EU average of 6.4% Dec. 05 Dec. 06 Dec. 07 Dec. 10 9 Tier I ratio at 9.6% vs. EU average of 7.4%
Source: Company data, Merrill Lynch Research (Retail Banks) 21 IV. Closing Comments Closing Remarks
Alpha Bank a leading Greek franchise rapidly developing into a Southeastern European powerhouse
Essentially quadrupling of mature equivalent branch network over next three years to support accelerated market penetration
Very positive volume growth and overall performance in 2007
Strong focus in growing our retail franchise
Strong liquidity and capital position to fund growth plans undisrupted from current capital markets conditions
23 Investor Relations Contacts
ALPHA BANK Mr. Marinos Yannopoulos General Manager and CFO 40, Stadiou Street, 102 52 +30210 3262 366 Athens, Greece [email protected]
Mr. Michael Massourakis E-mail : [email protected] Group Chief Economist Internet : www.alpha.gr +30210 3262 828 Reuters : ACBr.AT [email protected] Bloomberg : ALPHA GA Mr. Vassilios Psaltis Head of Group Investor Relations & Corporate Development +30210 326 4 009 [email protected]
Ms. Elena Katopodi Investor Relations Officer +30210 326 4 184 [email protected]
Ms. Maria Chatzi Investor Relations Officer +30210326 4 112 [email protected]
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