MILAN Aug 7 (Reuters) - Italian mid-sized lender Credito Valtellinese posted a an 11 percent rise in its net profit, but loan loss provisions rose sharply in the period.
The bank, one of 15 Italian lenders targeted by a pan-European asset review, put aside 212.7 million euros in the period against losses on loans and other financial assets, up 70 percent from a year before.
The bank said the ongoing weakness of the Italian economy, which slid back into recession in the second quarter, and the uncertainties linked to the banking review would weigh on prospects for the group in the current year.
"Credit risk costs will weigh markedly on profitability given still frail and uncertain economic recovery prospects," it said in a statement.
Credito Valtellinese said its best-quality Common Equity Tier 1 capital stood at 11.6 percent of risk-weighted assets after a recently concluded share sale. That compares with a a threshold of 8 percent set by regulators for banks in the review.
First-half operating profit increased 65.8 percent thanks to rising interest and trading income.
Credito valtellinese says 11.6 pct after capital increase (Reporting by Valentina Za)