UPDATE 1-Italy's Banca Carige posts Q1 profit after large 2013 loss

Thu May 15, 2014 4:16pm EDT

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MILAN May 15 (Reuters) - Italian mid-sized lender Banca Carige posted a net profit of 17 million euros in the first quarter, down 65 percent from a year earlier, and its capital base remained weak ahead of a planned 800 million-euro rights issue.

The bank said its best-quality Common Equity Tier 1 capital stood at 6.5 percent of risk-weighted assets at end-March. That compares with an 8 percent threshold the European Central Bank has set in a review of the banking sector it is carrying out across the euro zone this year.

Carige expects the share sale to bring its Common Equity ratio to 9.5 percent. However, analysts regard Carige as one of the weakest among the 15 Italian banks under the ECB's scrutiny.

The bank reported a net loss of 1.76 billion euros in 2013, after putting aside 1.09 billion euros to cover loan losses and writing down the value of past acquisitions for a further 1.67 billion euros under new management.

In January-to-March it wrote down loans for 69 million euros, up by almost a third from a year earlier, and said that loan loss provisions covered 37.4 percent of all doubtful loans. The coverage ratio was 56.6 percent for the loans least likely to be repaid, it said.

The bank said it had improved its liquidity positions by selling part of its government bond holdings and reducing their average maturity.

Carige said it had repaid 2 billion out of 7 billion euros in longer-term European Central Bank loans and was on course to meet its target of reimbursing 80 percent of the total by year-end. (Reporting by Valentina Za; editing by David Evans)

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