UPDATE 2-Portugal's Millennium bcp 9-month profit drops 46% as provisions soar

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LISBON, Oct 29 (Reuters) - Portugal’s largest listed bank Millennium bcp reported on Thursday a 46% drop in its nine-month net profit to 146.3 million euros ($173 million), dragged down by higher provisions and impairments in the wake of the coronavirus pandemic.

However, its net interest income (NII), a measure of earnings on loans minus deposit costs, was little changed at 1.15 billion euros from a year ago, the bank said in a statement.

On a positive note, its core net income - NII plus net fees minus operating costs - grew 1% to 835.2 million euros.

But loan provisions increased 25% to 374.2 million euros in January-September 2020 from a year ago, while other provisions and impairments skyrocketed 126% to 176.4 million euros, the lender said.

“We have significantly reinforced impairments in the context of the pandemic. (We’re) adapting the business to the crisis. We have moved from a growth mode to a balance sheet protection mode,” Chief Executive Miguel Maya told a news conference.

Portugal is going through its worst recession in almost a century due to the coronavirus pandemic, with the government predicting the economy will contract 8.5% this year.

Portuguese authorities in March said bank customers could suspend loan repayments, in a move aimed at relieving pressure on businesses and individuals during the pandemic. The moratorium has been extended until September 2021.

Millennium bcp said it had already granted more than 100,000 such loan repayment holidays.

The bank said its non-performing exposures fell by 1 billion euros from a year ago to 3.6 billion euros in September after it sold various problematic asset portfolios.

Millennium bcp, whose main shareholder is China’s Fosun group, said its fully implemented Tier 1 common equity (CET1) capital ratio stood at 12.4%, comfortably above the required 8.8%.

Millennium bcp also operates in Poland, Angola and Mozambique. Its Polish unit, Bank Millennium, reported a 75% fall in nine-month net profit on Tuesday.

$1 = 0.8461 euros By Sergio Goncalves, Editing by Victoria Waldersee, Andrei Khalip and David Evans