DoValue plans to diversify beyond non-performing loans after 19 million euro net loss

By Valentina Za and Alberto Chiumento

MILAN (Reuters) -Italian debt recovery company doValue plans to diversify its sources of revenue beyond non-performing loans(NPL), its CEO said on Friday, after it reported a 19 million euro ($20.57 million) net loss for 2023.

Healthier bank balance sheets mean levels of impaired loans remained low, it said, reporting a 10% drop in collections ahead of the presentation of a new business plan on March 21.

"Diversification strategy is key to our resilience and long term profitability", CEO Manuela Franchi said on a conference call with analysts.

She said doValue would soon launch an investor advisory service and that there were opportunities in Spain where banks were outsourcing more of their NPL recovery operations.

DoValue's shares, which were down 27.9% year-to-date at Thursday's close, dropped by as much as 8% on Friday and were last down 3.9% at 1253 GMT.

The full-year loss also reflected impairments booked at the Spanish business which led the company in January to revise its 9-month net profit to a loss.

"The qualitative 2024 outlook seems to indicate still a challenging year in 2024," Citi analysts said in a note, adding that the results did not show any additional weakness for 2024.

DoValue in 2022 failed to renew an agreement to recover debt on behalf of Sareb, the "bad bank" Spain set up to clean its banking system after the global financial crisis.

At the end of last year, doValue managed 116.4 billion euros in bad loans, down from 120.5 billion a year earlier.

The group said 2024 would be a year of transition in which it would cut costs and invest to support growth in 2025 and 2026.

DoValue, which is also active in Greece, said it expected new contracts to manage some 40 billion euros in bad debts over the next 18 months across Southern Europe.

However, it said some of these deals could take longer than anticipated to materialise, preventing the company from returning to growth this year.

($1 = 0.9237 euros)

(Editing by Matthew Lewis and Jane Merriman, Kirsten Donovan)