Adds CEO quotes, changes throughout

By Sergio Goncalves

LISBON, Feb 2 (Reuters) - Novo Banco's 2023 net profit jumped 32.5% to a record 743 million euros ($809 million) as Portugal's fourth-largest bank benefited from rising interest rates, while strengthening its capital as it readies a potential initial public offering (IPO).

CEO Mark Bourse told Reuters after the release of the results on Friday that in operating terms the bank keeps "moving in the direction" of an IPO, adding that "shareholders will decide whenever the time is appropriate".

"Portugal is very much a sweet spot in terms of investments and people are looking to find a way to play it," he said, citing strong liquidity and capital generation, and seven notches of credit rating upgrades over the past two years.

"I don't think we can find an example where that level of increase in quality has happened that quickly," Bourke said.

Fitch started rating Novo Banco, which emerged from the ruins of failed bank BES in 2014 and has been 75%-owned by U.S. private equity firm Lone Star since 2017, on Thursday with investment-grade level BBB- and a stable outlook.

The unlisted lender reported its third consecutive year of profits, "outperforming all 2023 financial guidance and establishing a track record of execution and delivery", Bourke said.

Benefiting from interest rate hikes by the European Central Bank, its consolidated net interest income, or earnings on loans minus deposit costs, jumped by 83% to 1.14 billion euros.

Net customer loans at year-end were stable at 24.5 billion euros, while its fully-loaded Common Equity Tier 1 solvency ratio stood at 18.2% in December, up 500 basis points from a year earlier.

($1 = 0.9189 euros)

(Reporting by Sergio Goncalves; editing by Andrei Khalip and Louise Heavens)

((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters Messaging: sergio.goncalves.reuters.com@reuters.net))