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Alpha Bank reported large profit decrease for 2010

The Greek Financial Group - Alpha Bank reported a sharp drop in profits last year after the deepening economic crisis in the country affected the growth of bank lending and increase reserves to cover problem loans. The third largest Greek lender has realized a net profit of 85.6 million for 2010 compared with a positive financial result of 349.8 million for 2009, writes Financial Times. The profit decreased sharply by 75.5 per cent, which contributes one-time tax of 61.8 million imposed by the government to curb the budget deficit. The Greek government, the country's international creditors, the European Commission and the International Monetary Fund (IMF) urged banks in Greece to unite to strengthen investor confidence to them and reduce their dependence on funding from the European Central Bank. The management of Alpha Bank, however, are adamant that merger talks with its larger rival National Bank of Greece have ended without success and will not be renewed. According to Alpha Bank was too risky to negotiate a merger at this stage because of the unstable economic environment. From Alpha Bank has indicated it will focus on reducing the cost and level of indebtedness to increase their liquidity. The provisions of the Bank's bad loans rose to a record 2.2 billion last year. Problem loans increased by 40% in 2010 amid debt crisis in the country. Their share of total loans reached 8.2 percent in the fourth quarter of last year compared with 5.7 percent a year earlier.
The deposit base at the same time reduced by 10%, the strongest decline is recorded in the second quarter of 2010, when the debt crisis in Europe was at its height and Greece need to get a rescue loan from the EU and the IMF. The net profit of Alpha Bank from its operations in Cyprus and in developing markets in Southeast Europe, which account for nearly 25% of the bank, declined by 13.6 percent to 44 million. The financial results of Alpha Bank were in line with market expectations.