Portugal's Millennium bcp 9-month profit jumps 63%, strong core income

By Sergio Goncalves

LISBON (Reuters) - Portugal's largest listed bank, Millennium bcp, posted on Monday a 63.4% jump in nine-month net profit thanks to a robust rise in core income stemming from policy rate hikes and despite losses at its Polish subsidiary.

The lender netted 97.2 million euros ($96.1 million) between January and September, up from 59.5 million euros a year earlier. Profit in its domestic business more than doubled to 295.7 million euros.

Its half-owned Polish subsidiary, Bank Millennium, last week reported a nine-month loss of 270.5 million euros as it counted the cost of loan repayment holidays imposed on Polish banks in July.

Millennium bcp benefited from interest rate hikes by the European Central Bank to control inflation, after years of record low rates pressured lenders' financial margins, and by central banks in other countries where it operates: Poland, Angola and Mozambique.

Millennium bcp's consolidated net interest income, or earnings on loans minus deposit costs, rose 32.7% to 1.54 billion euros in the nine months. Its fees and commissions grew 3.7% to 573.8 million euros.

Chief Executive Miguel Maya said that "performance was supported by a 24.7% increase in the group's core income and a strict management of operating costs", but were hampered by results in Poland.

"We are focused on remunerating shareholders better, as our return on equity (ROE) of 2.5% remains very low and below the bank's cost of capital, but we expect to converge to the target of 10% in 2024," he told reporters.

Its cost-to-income ratio dropped to 38% in September, compared to 50% a year earlier, Maya said.

The bank said it reduced total non-performing exposure by 14.4% to 2.42 billion euros as of September from a year earlier.

It said its cost of risk in September, which measures the cost of managing credit risks and potential losses for the bank, dropped to 55 basis points from a previous 60 points a year ago.

($1 = 1.0112 euros)

(Reporting by Sergio Goncalves, editing by Ed Osmond and Marguerita Choy)