July 28, 2014 / 5:47 PM / 4 years ago

UPDATE 1-Portugal's Millennium BCP bank sharply cuts first-half loss

* H1 net loss 62 mln euros vs f‘cast 76 mln loss

* Loan impairments and other provisions down over 31 pct

* Net interest income up 30 pct to 496 mln euros (Adds no direct exposure to Espirito Santo holdings, details)

LISBON, July 28 (Reuters) - Millennium bcp, Portugal’s second-largest listed bank by assets, sharply reduced its first-half net loss on a sharp rise in net interest income, even as credit demand remained weak.

BCP Chief Executive Nuno Amado also said on Monday his bank had no direct exposure to debt issued by troubled holding companies of the Espirito Santo banking family, nor any direct loans to them.

Three holding companies of the founding family of Banco Espirito Santo asked for creditor protection earlier this month.

Amado said unspecified loans to smaller firms of the Espirito Santo group, ranging from healthcare to hotels, were already provisioned for, but BCP did not expect to lose that money.

The net loss of 62 million euros ($83 million) came in lower than the 76 million loss expected on average by analysts. The bank said it had benefited from a trend of recovering profitability in Portugal and a growing contribution from international activities.

While impairments on bad loans and heavy costs of state support, to which the bank resorted in 2012 at the height of Portugal’s debt crisis, still weighed on earnings, the bank said loan impairments and other impairments and provisions fell more than 31 percent from a year earlier.

A year ago, BCP’s loss of 488 million euros partly reflected its loss-making Greek unit, which has since been sold.

Net interest income - the difference between interest charged on loans and interest paid on deposits - rose 30 percent to 496 million euros in the first half of 2014, which the bank attributed to a reduction in customer deposit costs.

A week ago, BCP completed a share issue to raise 2.25 billion euros, despite concerns about Banco Espirito Santo that hit banking and other assets in Portugal, and even caused a brief sell-off in global assets earlier this month.

$1 = 0.7442 Euros Reporting By Andrei Khalip and Daniel Alvarenga; Editing by David Holmes

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