UPDATE 1-Asset sales lift Mediobanca first-quarter profit
* Net profit at 171 mln euros
* Posts gains of 80 mln euros from asset sales
* Core Tier 1 ratio at 11.5 pct
* Shares up 2.8 pct (Recasts with detail, comments from CEO, source on pact)
By Lisa Jucca and Gianluca Semeraro
MILAN, Oct 28 (Reuters) - Capital gains from the sale of equity investments helped to lift Mediobanca's first-quarter net profit by 57 percent from a year ago, offsetting a fall in trading income and lower fees at the Italian investment bank.
Mediobanca posted a net profit of 171 million euros ($236 million) for the three months to Sept. 30, its first quarterly results since announcing in June that it would move away from decades of equity investments aimed at gaining influence at top Italian companies to concentrate on its core banking business.
Mediobanca shares were up 2.8 percent by 1412 GMT, outperforming a 1.9 percent fall in the European banking index , as analysts welcomed the capital gains as well as higher deposits at its retail bank CheBanca! and lower costs.
Writedowns on its equity investments had led the bank to post a net loss of 180 million euros in its full financial year to June 30, forcing it to scrap its annual dividend.
The Milan-based bank said on Monday that it had cut its stake in Telco, the holding company that controls Telecom Italia , to 7.3 percent from 11.6 percent as it presses ahead with the reduction of its large equity portfolio.
It booked 80 million euros of total gains from this disposal and the sale of shares in other corporate holdings such as RCS MediaGroup and Gemina, it said.
The profit result beat a 150 million euro consensus forecast in a poll of analysts by Mediobanca.
"Market conditions have helped us. The net asset value of our equity holdings rose by 20 percent in the first quarter," Mediobanca Chief Executive Alberto Nagel told a shareholder meeting on Monday.
"This is a good moment. We have sold some equity and will continue to sell."
The value of Mediobanca's portfolio, which includes a 13 percent stake in Italy's biggest insurer, Generali, rose to 5.1 billion euros from 4.3 billion euros at the end of June. Mediobanca has already said it will trim its Generali stake by 3 percent to cope with higher bank capital requirements, though it still considers the stake a core asset.
Mediobanca also said its core Tier 1 capital ratio, a percentage of capital put aside to hedge against risky bank assets including investments and loans, stood at 11.5 percent at the end of September, comfortably above the 8 percent benchmark set by the European Central Bank (ECB) and one of the strongest in the Italian banking sector.
While top Italian banking players UniCredit and IntesaSanpaolo have a capital strength comparable to Mediobanca's, nine out of the 15 banks that will be reviewed by the ECB have capital ratios of less than 10 percent.
Nagel said that Mediobanca, among about 130 European banks that face the ECB's planned asset quality review and a subsequent stress test, is more than adequately equipped for the review.
The bank said coverage of bad debt, or the money the bank put aside to cover against possible loan defaults, is stable at 45 percent. The coverage rose to 65 percent for non-performing loans, which are defined as loans carrying the highest risk of default.
Bad debt represented only 3 percent of total loans at Mediobanca against 9 percent across the Italian banking system. For non-performing loans the share was 0.8 percent of total loans.
Meanwhile, the investors that control Mediobanca through a shareholder pact are considering loosening the terms of their shareholder agreement by the year end and could reduce their combined stake in the bank to less than 30 percent, a source close to the matter told Reuters on Monday.
The group, including heavyweight Italian companies such as UniCredit and Pirelli, now controls a little more than 30 percent of the bank's shares, down from 42 percent in June.
The shareholder agreement was extended in September until 2015 and the pact's chairman said on Monday that there was nothing to add since that announcement with regard to the composition and duration of the pact. ($1 = 0.7250 euros) (Additional reporting by Paola Arosio; Editing by David Goodman)