Pop Milano Q2 hit by market turmoil

MILAN (Reuters) - Italian cooperative lender Banca Popolare di Milano (PMII.MI) nearly halved its second-quarter net profit to 65 million euros from a year ago, though it was up 4.8 percent from the first quarter, it said in a statement.

Pop Milano said net interest income in the quarter was virtually flat at 266 million euros.

It said in its investment banking and corporate centre, "any recovery in the gap (with 2008 forecasts) ... will depend mainly on interest rates and credit spreads."

It cited "the poor performance of financial markets and the lack of gains from disposal of shares held in listed companies" for part of the fall in profits.

Pop Milano, one of Italy's mid-tier domestic lenders, said it "confirmed, albeit with a different mix, the forecast for full year 2008 operating income for the commercial banking, corporate banking and wealth management sectors" given at 2007 results and available at www.bpm.it./investor/ita/inv_presentazioni.shtml.

Pop Milano said nothing in its statement about governance, which the Bank of Italy has asked it to change. It needs to reduce the influence of employee shareholders and the board had been expected to meet before the end of August on proposed changes.

But Corriere della Sera newspaper said on Sunday the deadline had been pushed back to Sept. 12.

Pop Milano, based in the financial capital of Milan with a wealthy hinterland, has a market capitalisation of about 2.75 billion euros and ranks sixth among Italy's listed retail banks.

Its shares have fallen nearly 30 percent so far this year, compared with a 32.2 percent fall in the DJ Stoxx index of European banks .SX7P.

(Editing by Elaine Hardcastle)