• Net Profit: PLN 666 million for Q3 2024; accumulated net profit for three quarters at PLN 1.83 billion.
• Tier 1 Ratio: 16.78%.
• Total Capital Ratio (TCR): 17.11%.
• Revenue: Over PLN 4.5 billion, an increase of PLN 415 million year-on-year.
• Cost of Risk: PLN 305 million for the first three quarters; cost of risk factor reduced to 72 basis points.
• Net Interest Margin: 6.32% for Q3; 6.08% cumulatively for three quarters.
• Cost to Income Ratio: 30% for Q3; 33.9% cumulatively for three quarters.
• Mobile App Users: 1.24 million, a 19% increase year-on-year.
• Mortgage Loan Portfolio: Over PLN 12 billion, representing 30% of the credit portfolio.
• Cash Loans: 10% higher year-on-year; 3% decrease quarter-on-quarter.
• Installment Loans: Portfolio increased by 7% year-on-year.
• Commission Income: 11% growth year-on-year; cumulative result of PLN 3.8 billion.
• Operating Costs: Low level in Q3 due to personnel and marketing cost adjustments.
• Loan to Deposit Ratio: Steady at around 82%.

• Warning! GuruFocus has detected 2 Warning Sign with WAR:ALR.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alior Bank SA (WAR:ALR) reported a net profit of PLN 666 million for Q3 2024, contributing to an accumulated net profit of PLN 1.83 billion for the first three quarters.
• The bank's Tier 1 ratio stands at a solid 16.78%, and the Total Capital Ratio (TCR) is 17.11%, indicating a strong capital position.
• The number of mobile app users increased by nearly 20% year-on-year, reaching 1.24 million, reflecting successful digital engagement.
• Alior Bank SA (WAR:ALR) achieved a significant reduction in the cost of risk, which decreased to 72 basis points.
• The bank's net interest margin improved to 6.32%, showing a 16 basis point increase year-on-year.

Negative Points

• The mortgage loan sales in Q3 2024 were lower compared to Q3 2023, attributed to the end of sales under a specific program.
• Cash loan sales decreased by 3% quarter-on-quarter, reflecting a conservative approach in pricing and risk management.
• The bank's NPL level slightly increased to 7.11% due to reclassification of a major client to stage three default.
• Operating costs are expected to rise in Q4 2024 due to increased marketing expenses and personnel costs.
• The number of court cases related to free loans is growing, posing potential legal and financial challenges.

Q & A Highlights

Q: What level of NPL is forecast for the next quarter, and what is the final NPL level in the corporate sector? A: It is difficult to assess the exact NPL level for the next quarter due to ongoing initiatives. However, the ambition is to continue the downward trend observed in previous quarters. In the corporate sector, the target is to align with the market level, which is currently between 5% to 7%.

Q: What was the MREL index at the end of the third quarter of 2024? A: The MREL index at the end of the third quarter of 2024 was 11.7%.

Q: Why did the NPL increase quarter on quarter despite a drop in the loan portfolio? A: The increase in NPL was due to a modification in the methodology for non-balance sheet requirements.

Q: Has the bank met the regulatory capital requirements? A: Yes, the bank met the regulatory capital requirements with a level of 4.7% at the end of September.

Q: How does the board view the sanction on the free loan, and what is the size that is in danger? A: The number of claims is increasing, driven by law firms seeking new business opportunities. The board is monitoring the situation, especially in light of potential European Court of Justice decisions and legislative changes.

Q: What is the bank's sensitivity to interest rate changes by 100 basis points? A: The sensitivity at the end of 2023 was PLN 200 million. Current market conditions suggest a potential drop to PLN 151-160 million over a 12-month period, which the bank plans to manage through business development and hedging activities.

Q: What would be the impact of the capital regulation CRR three on the capital indexes? A: The implementation of CRR three is expected to impact the capital indexes by 1 to 2 percentage points.

Q: What is the current level of the long-term financing index? A: According to the required methodology, the long-term financing index is currently at 44%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.