Alior Bank (ALR) Q3 2024 earnings summary

Executive summary

• Q3 2024 net profit reached PLN 666 million, up 16% year-over-year, with cumulative nine-month profit at PLN 1.83 billion, up 29% year-over-year, reflecting strong financial performance and capital position.

• Revenues in Q3 2024 grew 12% year-over-year to PLN 1.58 billion, with net interest income up 11% and net commission income up 20% year-over-year.

• Mobile app users increased 19% year-over-year to 1.24 million, and customers with regular inflows rose by 71,000 year-over-year.

• Maintained a strong capital position with Tier 1 ratio at 16.78% and TCR at 17.11%, well above regulatory minimums.

• Significant decrease in cost of risk and NPL ratio, reflecting improved credit quality.

Financial highlights

• Net profit for Q3 up PLN 94 million quarter-on-quarter and PLN 386 million year-to-date compared to last year.

• Net interest income for the period was PLN 3,792 million, up 11% year-over-year; net fee and commission income rose to PLN 533 million, a 7% increase year-over-year.

• Cost of risk in Q3 2024 was 0.92% (0.77% excluding flood provisions); NPL ratio at 7.10% (-2.29pp y/y).

• ROE in Q3 2024 was 25.7%; for the nine months, 24.4%.

• Loan-to-deposit ratio stable at 82.3%; total assets at PLN 91.2 billion (+6% y/y).

Outlook and guidance

• New strategy to be published early next year, focusing on safe capital, high NIM, innovation, digitization, and leadership in consumer finance.

• 2024 cost of risk expected at ~0.6%, assuming no major macro changes; long-term guidance at 0.8%.

• Lending forecast to accelerate in 2024, with further growth in 2025 driven by investments and lower rates.

• Main financial targets: ROE >13%, C/I <45%, Tier 1 >13.5%, TCR >15%, COR <1.6%, NPL <10%.

• Lending growth may be constrained by cautious credit policy and subdued demand, but improved macroeconomic conditions and labor market should support borrower quality.