Alior Bank Q1 profit surges 58% as it aims to keep CoR at bay

GDANSK (Reuters) - Poland's Alior Bank reported on Thursday a 58% yearly rise in net profit to 578.1 million zlotys ($142.9 million) on interest revenues from hedging instruments, growth of credit portfolio and securities.

Net interest income rose 15% to 1.27 billion zlotys and net interest margin climbed 15 basis points to 5.96%, Alior said.

The lender managed to improve its credit portfolio quality and increase its size. Its quarterly sales of mortgage loans more than quadrupled to 1.64 billion zlotys, supported by 1.2 billion zlotys from the Safe 2% Credit scheme.

At the same time, its quarterly cost of risk (CoR) came in at 0.68% compared with 1.61% in the year-ago quarter, while the provisions for expected credit losses declined 55% to a little over 111 million zlotys.

The bank said it expected to keep annual CoR below 1%, as it did not see any risks that could hike its loan loss provisions so far.

It also estimates that it will achieve a non-performing loans ratio (NPL) below 7% in 2024, and expects a further drop below 5% to be possible within a two-year horizon, deputy chief executive officer Tomasz Miklas said on conference call.

Alior's first-quarter NPL came in at 7.65% compared with 9.80% in the last year's period, as the lender continued to improve credit risk management in a bid to reach a strategy goal of less than 10%.

A successor to the current two-year strategy is set to be presented in the fourth quarter, said CFO Radomir Gibala.

The bank's stock opened up 2% but reversed course later, falling by 1.1% by 0921 GMT.

($1 = 4.0465 zlotys)

(Reporting by Mateusz Rabiega; Editing by Varun H K and Mark Heinrich)