May 7, 2020 / 11:18 AM / 25 days ago

Italy's Creval pushes ahead with business plan to offset virus impact

MILAN, May 7 (Reuters) - Italy’s Creval is pushing ahead with its plan to cut costs and impaired loans, allowing the mid-sized bank to tackle the difficulties posed by the COVID-19 emergency, CEO Luigi Lovaglio said on Thursday.

The lender based in Valtellina, north of Milan, reported a better then expected net profit, sending its shares up as much as 7.5%.

Under a five-year plan announced last year Creval aimed to streamline its business and shed risky assets with a target to roughly halve its gross bad loan burden to below 6.5% of total lending by 2023.

In the first quarter of the year the proportion of soured debts over its total lending was at 8.6%, down from 9.4% in 2019, thanks to total sales of bad loans of more than 500 million euros year-to-date.

Lovaglio told analysts the lender was considering further reducing problematic loans, mainly those “unlikely to pay” (UTP), to reach planned disposals worth 800 million euros by the end of the year. “We’ve been called by specialised companies who asked us to look at our UTP portfolio,” Lovaglio said.

Creval’s first-quarter net profit more than tripled to 25.3 million euros ($27.3 million), helped by capital gains on the sales of non-core assets.

Italian broker Banca Imi said the “results were stronger than expected both at the operating level and at a loan loss provision level, incorporating a lower than expected impact from the COVID-19 outbreak.”

It expects however that the impact form coronavirus could hurt the bank’s earnings in the coming quarters.

$1 = 0.9268 euros Reporting by Andrea Mandalà; editing by David Evans

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