MILAN, Feb 23 (Reuters) - Shares in Italian debt recovery company doValue fell early on Friday after it reported a 19 million euro ($20.57 million) net loss for 2023, hit by a 10% drop in collections.

Healthier bank balance sheets meant levels of impaired loans remained low, limiting the need for disposals which have traditionally fed the market for bad bank loans where companies such as doValue operate, it said.

DoValue's shares were down by 0.8% by 0850 GMT after dropping nearly 8% initially. As of Thursday's close they were down 27.9% year to date.

"The qualitative 2024 outlook seems to indicate still a challenging year in 2024", Citi analysts said in a note, adding that the results did not show any additional weakness for 2024.

DoValue in 2022 failed to renew an agreement to recover debt on behalf of Sareb, the "bad bank" Spain set up to clean its banking system after the global financial crisis.

The full-year loss reflects impairments doValue booked on its Spanish business in January, when the writedown led doValue to revised its 9-month net profit to a loss.

At the end of last year, doValue managed 116.4 billion euros in bad loans, down from 120.5 billion a year earlier.

The group said 2024 would be a year of transition in which it would cut costs and invest to support growth in 2025 and 2026.

DoValue will present a new business plan on March 21.

DoValue, which is active also in Greece, said it expected new contracts to manage some 40 billion euros in bad debts over the next 18 months across Southern Europe.

However, some of these deals could take longer than anticipated to materialise, preventing the company from returning to growth this year.

DoValue is "economically sound" to face the current scenario, it said.

($1 = 0.9237 euros) (Reporting by Valentina Za, Alberto Chimento Editing by Matthew Lewis and Jane Merriman)