* BPI gains sharply on bond holdings
* Pays back some govt loans
(Adds background, detail)
LISBON Jan 30 Banco BPI, Portugal's
third-largest listed bank, swung to a higher-than-expected net
profit in 2012 from a year-ago loss as the lender booked strong
capital gains on government bonds.
The profit of 249 million euros ($337.88 million) sharply
beat expectations and came after a loss of 285 million euros in
2011, the year Portugal was forced to seek a bailout from the
European Union and IMF.
But the bank said it made a capital gain of 170 million
euros on government bonds last year, aided by a sharp
improvement in the euro zone debt crisis, especially after the
European Central Bank announced it was ready to buy government
BPI said it also gained 122 million euros from the purchase
of its own debt last year.
The result allowed the bank to pay back 200 million euros in
so-called contingent convertible bonds to the government,
leaving the government with 1 billion euros remaining. Those
bonds were issued as part of the 12 billion euros of funds set
aside in Portugal's bailout to help the banking sector.
The bank said core Tier 1 capital ratio reached 15 percent
at the end of 2012, easily exceeding the Bank of Portugal's
requirement of a minimum 9 percent ratio.
Confidence surrounding Portugal has been sharply boosted in
the past few months and its bonds have been some of the
strongest performers in Europe in the past year. Ten-year
government bond yields stood at around 18 percent a year ago and
currently trade around 6 percent.
($1 = 0.7370 euros)
(Reporting By Axel Bugge; editing by Keiron Henderson)