Alpha Bank Business Review 40 STADIOU, GR-102 52 ATHENS 2008 Business Review 2008 Business Review 2008 Table of Contents Table of Contents page BRIEF HISTORY .............................................................................................................................................. 5 KEY INDICATORS............................................................................................................................................ 6 ALPHA BANK’S SHARE ................................................................................................................................... 7 MESSAGE FROM THE CHAIRMAN.................................................................................................................... 8 MESSAGE FROM THE MANAGING DIRECTOR ................................................................................................... 11 1. THE WORLD AND THE GREEK ECONOMY IN 2008 AND THE PROSPECTS FOR 2009....................................... 16 2. BUSINESS UNITS....................................................................................................................................... 25 Retail Banking in Greece ............................................................................................................................ 25 Southeastern Europe.................................................................................................................................. 33 Medium and Large Corporates .................................................................................................................... 41 Asset Management and Insurance............................................................................................................... 46 Investment Banking and Treasury................................................................................................................ 50 Other Activities ......................................................................................................................................... 53 3. OPERATIONAL SYSTEMS AND DISTRIBUTION CHANNELS............................................................................ 55 Operational Restructuring........................................................................................................................... 55 Branches and Alternative Distribution Channels ........................................................................................... 57 4. RISK MANAGEMENT.................................................................................................................................. 61 5. CAPITAL ADEQUACY ................................................................................................................................. 69 6. CORPORATE GOVERNANCE........................................................................................................................ 71 Board of Directors ..................................................................................................................................... 71 Audit Committee ....................................................................................................................................... 73 Risk Management Committee..................................................................................................................... 74 Management Remuneration Committee....................................................................................................... 75 Executive Committee ................................................................................................................................. 75 Internal Audit ............................................................................................................................................ 76 Compliance ............................................................................................................................................... 76 Organisational Chart .................................................................................................................................. 78 7. AUDITOR’S REPORT AND FINANCIAL STATEMENTS .................................................................................... 80 8. BUSINESS UNITS AND GEOGRAPHICAL SECTOR ANALYSIS.......................................................................... 87 2 3 Business Review 2008 Brief History Brief History Alpha Bank’s history goes back to the commercial The new, enlarged Bank which resulted from the business founded in 1879 in Kalamata by Ioannis F. merger now operates under the abbreviated title Costopoulos. The business soon branched out into Alpha Bank. banking activities, with a particular focus on the The registered seat of Alpha Bank S.A. is at 40 foreign exchange market. In 1918 the banking Stadiou Street, Athens, and the Bank is listed in the section of the I. F. Costopoulos business was Register of Incorporated Companies (Societes renamed Kalamon Bank. In 1924, when its Anonymes) under no. 6066/06/Β/86/05. Its term registered seat was moved to Athens, the Bank was has been set to the year 2100, and can be extended named Greek Commercial Credit Bank. In 1947 the by decision of the General Meeting of Shareholders. name was changed to Hellenic Credit Bank, in 1972 to Credit Bank, and in March 1994 to Alpha Credit A modern financial services Group, Alpha Bank Bank. Having grown rapidly in recent decades, the offers a wide range of financial services to Bank has moved beyond offering standard banking individuals and corporations both in Greece and services and products and has evolved into a full- abroad, currently serving some 4 million customers. blown financial services Group. In 1999 it acquired It is active in most of the markets of Southeastern a 51% stake in the Ionian Bank, and on April 11, Europe (Romania, Serbia, Bulgaria, FYROM, 2000 the merger of the Ionian Bank through Albania, Cyprus, Ukraine), and is also present in absorption by Alpha Credit Bank was approved. London and New York. 4 5 Business Review 2008 Alpha Bank’s Share Key Indicators Alpha Bank’s Share (in Euro million) Change % 2008 2007 The market capitalisation of Alpha Bank, which has The Ordinary General Meeting of the Bank’s BALANCE SHEET been listed on the Athens Stock Exchange since Shareholders held on 3.4.2008 approved a share 1925, stood at Euro 2.75 billion on the last day of buy-back scheme, to be carried out by 3.4.2010, for Total Assets 19.4% 65,270 54,684 2008, and the Bank is ranked as the sixth largest up to 5% of the outstanding share capital paid up Loans and advances to Customers 20.5% 50,705 42,072 company on the Athens Stock Exchange. each time, at a price between a minimum of Euro 1 Due to Customers 22.7% 42,547 34,665 and a maximum of Euro 33 per share. Pursuant to Total Equity -8.2% 3,941 4,291 At the end of 2008 the Bank's market capitalisation this decision, from 8.4.2008 to 27.6.2008 the Bank accounted for 5.38% and 13.07% of the ASE acquired 7,989,610 shares, raising the total volume PROFIT AND LOSS ACCOUNT Composite Share Price Index and Banking Index of the shares in its possession to 16,522,691 shares respectively, with a weighting of 5.88% in the Total Income 4.8% 2,346 2,237 or 4.02% of its paid up share capital. On 30.6.2008, FTSE/ATHEX 20 Index. In February 2004, the share Total Expenses 14.9% 1,178 1,025 a total of 16,439,066 shares held by the Bank, was added to the FTSE Eurofirst 300 Index, which Net Profit -33.4% 513 771(*) representing 4.00% of its paid up share capital, Profit before Tax and Impairment Losses -3.7% 1,167 1,212 includes the 300 largest European companies. The were sold through private placement to Paramount Earnings per Share (in Euro) -34.0% 1.26 1.90(*) share is also included in other important interna- Services Holding Limited, an investment tional indices, such as S&P Europe 350, FTSE Med organisation representing the interests of Qatar’s INDICES 100, MSCI Europe, DJ Euro Stoxx, and FTSE4Good. most distinguished family. In addition, from Net Interest Margin 3.0% 3.1% On December 31, 2008 the number of total shares 4.7.2008 to 31.12.2008 the Bank also acquired Return on Equity 15.7% 25.4% outstanding stood at 410,976,652 and the number 5,599,733 shares. Thus, on 31.12.2008 the total Cost to Income Ratio 50.2% 45.8% of the Bank’s shareholders stood at around 115,000, number of shares held by the Bank stood at Total Capital Adequacy Ratio 10.1% 12.5% of which 1,779 were institutional investors holding 5,683,358 shares or 1.38% of its paid up share TIER I Capital Adequacy Ratio 8.3% 9.6% 50% of the Bank’s shares (Greek: 10%, Foreign: capital, with a total purchase value of Euro 40%). 68,984,548.89. CREDIT RATINGS The continuing expansion of the Group's activities In addition to the Greek equity market, the Bank is Moody's Α1 Α1 attracts domestic and foreign investors, driving the also listed on the London Stock Exchange in the Standard & Poor's BBB+ Α- share's average daily transaction volume for 2008 form of Global Depositary Receipts (GDRs), and is Fitch Ratings Α- Α- to 1,422.261 units, with an average daily value of traded over-the-counter (OTC) in New York in the transactions of Euro 24 million. form of American Depositary Receipts (ADRs). (*) Profit from the disposal of Alpha Insurance A.E. of Euro 80.4 million is not included 6 7 Business Review 2008 Message from the Chairman Message from the Chairman diminishes. Many of these economies remain with repricing our loans at a faster pace and