By Lefteris Papadimas

ATHENS (Reuters) - Alpha Bank and Piraeus Bank reported on Friday a jump in profits for the first nine months of 2023 as higher rates boosted net interest income and bad loans declined.

Alpha Bank, Greece's fourth-largest lender by market value, reported net earnings of 491 million euros ($522 million), up 59% from the first nine months of 2022.

Its net interest income increased 45.8% to 1.34 billion euros, as the margin rose to 2.3% from 1.7% a year earlier.

Alpha Bank said last month that Italian bank UniCredit would become its biggest investor by buying a 9% stake owned by Greece's bank bailout fund.

"(It is) the first investment by a large European strategic player in the Greek banking sector since the onset of the sovereign debt crisis over a decade ago," said Alpha Bank's Chief Executive Vasilis Psaltis.

Alpha Bank's non-performing loan exposure ratio (NPE) fell to 7.2% of its total loan portfolio from 7.6% at the end of September last year. It plans to reduce it to 4% by 2025.

Greek banks cut their bad loan ratios to below 8% in the first half of 2023 from 45% in 2016, but that remains above euro zone peers.

They have returned to profit in the last few years and hope to resume paying dividends in 2024 for the first time since the Greek debt crisis erupted in 2010.

Piraeus, 27% owned by the country's bank rescue fund, reported adjusted earnings of 721 million euros for the nine month period, up from 331 million a year earlier.

Its net interest income jumped 59% to 1.46 billion euros, while its NPE ratio fell to 5.5% of total loans from 8.8% at the end of September 2022.

($1 = 0.9409 euros)

(Reporting by Lefteris Papadimas; Editing by Varun H K and Mark Potter)