Rating action

Scope Ratings GmbH (Scope) has today assigned a first-time issuer rating of BBB/Stable to Alpha Services and Holdings SA (Alpha, the non-operating holding company of the group) and to Alpha Bank SA (the operating bank of the group).

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business model assessment: Consistent (High). The issuer rating is anchored by the Consistent (High) business model assessment. Alpha is a commercial bank with total assets of EUR 73.1bn as of March 2025. The group has an established commercial banking franchise in Greece, and a limited international presence in Cyprus, Luxembourg, and the UK. It enjoys a strong market position in Greece, which supports pricing power and margins. The business model focuses on wholesale and affluent retail customers. Net interest income accounts for more than 70% of Alpha’s revenues given the focus on lending. Reflecting the structure of the Greek banking market, lending activity is skewed towards corporate customers, which can lead to relatively high revenue and earnings cyclicality.

After having successfully strengthened its financial fundamentals over the past five years, the group is now focused on expanding businesses where it has a competitive advantage over domestic peers, such as wealth management, while boosting its digital capabilities. The partnership with UniCredit in bancassurance and asset management, as well as the recent bolt-on acquisitions are evidence of the group’s strategic commitment to increase revenue diversification. The relatively low penetration of asset management in Greece offers an opportunity for growth in non-interest income that would enhance the resilience of the group's earnings when interest rates decline.

Operating environment assessment: Moderately Supportive (High). Greece (Moderately Supportive High) is the group’s main market, representing more than 90% of total revenues. It is a small economy within the EU, with a GDP per capita well below the euro area average. The high level of public debt may constrain the Greek government from providing support to the economy during downturns in the context of the rigid European fiscal framework. Scope acknowledges the reduction in the country’s public-debt ratio and general government deficit on the back of sustained economic growth, elevated inflation, and primary budget surpluses. The banking sector is dominated by four banks, which have significantly reduced non-performing exposures since 2018 and now exhibit solid financial metrics.

Greece is part of the European Banking Union, which has brought about a significant strengthening and harmonisation in bank regulation and supervision under the ECB’s Single Supervisory Mechanism, which we consider to be supportive of financial stability. The European Central Bank also shares with national central banks the role of lender of last resort, which limits illiquidity risks to the banks.

Scope arrives at an initial mapping of bbb- based on a combined assessment of the issuer’s operating environment and business model.

Long-term sustainability assessment (ESG factor): Developing. The assessment reflects Scope’s view that the issuer is embracing changes to ensure the long-term sustainability of its business model. Progress made may be tangible but does not warrant further credit differentiation.

Alpha has improved its digital offer, enhancing customer experience, and streamlining processes to keep up with evolving client behaviour in Greece. Initiatives included the migration of its Core Banking System to a private cloud (this means it could be promptly moved to a public cloud). Digital sales have increased to 31% from 18%, daily digital interactions reached more than 90% from 65%, and active digital users have grown to 2m from 1.6m. The group is also investing in innovation by adopting AI solutions and collaborating with fintech around Europe.

The assessment considers Alpha’s ongoing efforts to manage emerging ESG risks, particularly environmental ones. Currently, the group’s main goal is to expand its sustainable finance strategy, including supporting companies in their green transition and integrating sustainability criteria into all lending decisions.

The recently announced simplification in the group structure, entailing a merger between Alpha Bank and Alpha Holding is expected to be completed by H2 2025.

The long-term sustainability assessment leads to an adjusted rating anchor of bbb-.

Earnings capacity and risk exposures assessment: Neutral. The assessment reflects Scope’s view that the group’s earnings capacity may be variable over economic cycles but is sufficient to cover expected losses. Asset quality is broadly in line with peers. Risks are unlikely to generate losses capable of undermining the issuer’s viability.

Alpha's ability to generate returns over the cycle is supported by its strong market position and deposit-based funding profile. Since 2022, the group's return on average RWAs has more than doubled from 1% to 2.1%, largely driven by net interest margin expansion. However, profitability still lags domestic peers due to Alpha's greater focus on corporates and affluent individuals, which are less profitable segments in the current interest rate environment. Alpha has guided for a return on average equity of c. 12% in 2025 and 2026. Scope expects it to be slightly lower, at 10%, on account of more a more conservative trajectory for net interest income and loan loss provisions. Scope sees the profitability gap with peers narrowing as interest rates fall and the group’s revenue diversification increases.

Loan volume and fee growth, together with resilient interest margins, will support Alpha's top-line profitability over the next few quarters. At the same time, the cost of risk will normalise to around 50 bps. In 2024, the cost of risk was 118 bps, of which 51 bps related to asset disposals. With the cleanup of legacy NPEs almost complete, Scope does not expect further larger provisioning efforts. The quality of newer vintage performing loans remains solid.

Following the recent asset disposals under HAPS, Alpha's gross NPE ratio is now 3.8%, still higher than international peers. Scope views positively the group's commitment to an NPE ratio below 3% by YE 2027 on the back of strong loan growth and subdued inflows, while cautioning that an international trade war and geopolitical crisis could negatively impact the Greek economy and, in turn, credit quality, especially from 2026 onwards.

Like all domestic peers, Alpha has a concentrated exposure to the domestic sovereign (rated BBB/Stable) through government bonds and treasury bills (equivalent to 162% of the group’s Tier 1 capital at YE 2024). Scope considers this exposure to be manageable. In a stress scenario that assumes an orderly restructuring of the Greek sovereign debt, Scope estimates that the group could withstand losses of just below 40% on its domestic portfolio and remain prudentially viable. Scope notes that the majority of the Greek government bond portfolio is held at amortised cost, which limits the sensitivity of Alpha’s capital position to bond price volatility.

Financial viability management assessment: Comfortable (+1 notch). The assessment reflects Scope’s view that the issuer’s maintains comfortable buffer to relevant regulatory requirements and Scope expects it to continue to do so. The issuer’s financial viability is largely resilient to tail-risk events.

Alpha has significantly strengthened its capital position since 2022 through asset de-risking and earnings retention. As of March 2025, the group’s phased-in CET1 ratio stood at 16.9%, pro forma for the reduction in RWAs from the latest NPE disposals. This is about 700 bps above the minimum requirement. Although deferred tax credits (DTCs), a legacy of the Greek sovereign crisis, still make up 47% of total CET1 capital, Alpha has announced plans to accelerate their amortisation with a coefficient of 29% of planned dividends. Deferred tax credits are fully recognised as CET1 capital from a regulatory perspective and Scope considers the risk of a change in their regulatory treatment to be minimal.

In 2024, the ECB gave Alpha Bank (and the other three Greek systemic banks) permission to resume dividends. After a decade of crisis, this was a major milestone for the sector. Alpha will pay out 43% of 2024 profits this year and at least 50% in the next years.

Alpha is mainly funded by customer deposits, which have significantly increased over the past decade in line with the recovery of the Greek economy. Deposits are granular, and around 65% are covered by guarantee schemes. Liquidity ratios remain well above requirements.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that the risks to the current rating are balanced.

The upside scenarios for the ratings and Outlooks are (individually or collectively):

1. Improved and sustained through-the-cycle profitability combined with a further reduction in balance sheet risks, including non-performing loans and sovereign exposures, could lead to a more positive assessment of earnings capacity and risk exposures.
    
2. Balanced and prudent growth in Greece and abroad, either organically or through acquisitions, could improve the business model assessment.

The downside scenarios for the ratings and Outlooks are (individually or collectively):

1. A deterioration in macroeconomic conditions that materially impacts asset quality and/or earnings could lead to a downgrade of the earnings capacity and risk exposures qualifier.
    
2. A material increase in Greek sovereign risk exposure or a decline in the credit quality of the Greek sovereign could put downward pressure on the rating.
    
3. A material erosion of the group’s capital position, potentially due to significantly lower profitability and/or severe credit deterioration resulting in a downgrade of the financial viability management assessment.

Subsidiaries and affiliates: ratings and Outlooks

Alpha Services and Holdings SA: BBB/Stable. Alpha Services and Holdings is the non-operating holding company and parent of the Alpha Bank Group, the operating bank. The holding company was established in 2021 to be able to absorb losses from the disposals of NPEs without forcing the conversion of deferred tax credits into shares. The ratings on the holding company are aligned with those of the operating bank..

In March 2025, the group announced that the board of directors of both the HoldCo and the OpCo approved a draft merger agreement, under which the Bank would absorb the Holding Company. The completion of the merger is expected by H2 2025 and is subject to obtaining all necessary regulatory authorisations and approvals.

Debt ratings

Alpha Bank SA (Operating company)

Preferred senior unsecured debt: BBB/Stable. The rating is aligned with the issuer rating and applies to senior unsecured debt ranking above other classes of senior unsecured debt.

Non-preferred senior unsecured debt: BBB-/Stable. The rating is one notch lower than the issuer rating, reflecting statutory subordination.

Short-term debt: S-2. Alpha’s short-term credit rating is derived from the long-term issuer credit rating. The rating is consistent with Scope’s long-term/short-term rating correspondence table. The choice of the highest possible short-term rating (S-2 given the BBB issuer rating) reflects the group’s comfortable liquidity buffers and access to central bank funding.

Alpha Services and Holdings SA (Holding company)

Senior unsecured debt: BBB-. The rating is one notch below the issuer rating reflecting structural subordination.

Tier 2 debt: BB. The rating is three notches below the issuer rating, in line with our standard approach for Tier 2 debt instruments, without additional notching.

Additional Tier 1 security: B+. The rating is five notches is below the issuer rating. The standard notching is five notches below the issuer rating.

Short-term debt: S-2. Alpha Holding’s short-term credit rating is derived from the long-term issuer credit rating. The rating is consistent with Scope’s long-term/short-term rating correspondence table. The choice of the highest possible short-term rating (S-2 given the BBB issuer rating) reflects the group’s ample liquidity buffers and access to central bank funding.

Environmental, social and governance (ESG) factors

Please refer to the ‘long-term sustainability assessment’ under the ‘key rating drivers’ section above for the ESG analysis.

All rating actions and rated entities

Alpha Bank SA

Issuer rating: BBB/Stable, new rating

Preferred senior unsecured debt rating: BBB/Stable, new rating

Non-preferred senior unsecured debt rating: BBB-/Stable, new rating

Short-term debt rating: S-2/Stable, new rating

Alpha Services and Holdings SA

Issuer rating: BBB/Stable, new rating

Senior unsecured debt rating: BBB-/Stable, new rating

Tier 2 debt rating: BB/Stable, new rating
Tier 2 debt rating assigned to instruments XS2835739660, XS2307437629

Additional Tier 1 debt rating: B+/Stable, new rating
Additional Tier 1 debt rating assigned to instruments XS2805274326, XS2583633966

Short-term debt rating: S-2/Stable, new rating

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Financial Institutions Rating Methodology, 10 January 2025), is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity, and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlooks and the principal grounds on which the Credit Ratings and/or Outlooks are based. Following that review, the Credit Ratings and/or Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlooks are UK-endorsed.
Lead analyst: Alessandro Boratti, Associate Director
Person responsible for approval of the Credit Ratings: Marco Troiano, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings on 15 May 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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