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Creval swings to H1 profit from year-ago loss

Credito Valtellinese SpA reported a reclassified consolidated profit of €824,000 for the first half, compared to a loss of €194.8 million a year earlier.

Net interest income amounted to €178.9 million, down from €198.8 million in the previous year. The Italian lender noted that the figures are not readily comparable due to the adoption of IFRS 9 accounting standards and the impact from the disposal of bad and unlikely-to-pay loan pools.

Net fee and commission income declined on a yearly basis to €139.4 million from €142.3 million. Net trading, hedging income and profit on sales or repurchases dropped to €16.5 million from the year-ago €24.2 million.

Impairment or reversal of impairment and modification gains totaled €22.2 million, compared to losses of 328.6 million in the first half of 2017. Net losses on sales of investments and valuation differences on property and equipment at fair value amounted to €19,000, compared to gains of €68.8 million a year earlier.

Net nonperforming loans stood at 4.5% of loans and receivables with customers as of June 30, compared to 13.2% at the end of 2017. The NPL coverage ratio came in at 50.9% as of June 30, compared to 45.3% at Dec. 31, 2017. Including write-offs on outstanding loans, the coverage ratio reached 53.8% at June-end.

Creval's fully loaded and phased-in CET1 ratios stood at 10.2% and 14.0%, respectively, as of June 30. Inclusive of the positive impact tied to the completion of its €700 million capital increase in the first quarter, its de-risking process and announced new partnerships expected to be booked in the second half, the lender's proforma fully loaded and phased-in common equity Tier 1 ratios stood at 11.2% and 15.0%, respectively, as of June 30, compared to 10.9% and 14.4% at the end of March.

The lender noted that its capital ratios are well above the 2018 Supervisory Review and Evaluation Process requirements.

"In [the first half of] 2018 the bank turnaround can be declared completed," CEO Mauro Selvetti said.

"The significant capital bolstering upon completing the €700 million capital increase in March opened the way to a strong acceleration of the de-risking process, with major NPL disposals that, combined with the increase in NPL coverage ratios, contributed to improving the bank's overall credit quality."