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LISBON, Feb 13 (Reuters) - Banco Espirito Santo, Portugal's second-largest listed bank by assets, posted a larger-than-expected net loss of 518 million euros in 2013 on the back of large provisions and bad loans, it said on Thursday.
The bank said provisions rose 18.6 percent to 1.422 billion euros, driven by the recession in the Portuguese economy and deleveraging. In 2012 BES posted a net profit of 96 million euros.
Net interest income - the difference between interest charged on loans and interest paid on deposits - fell 12.4 percent to 1.034 billion euros.
Analysts surveyed by Reuters had predicted, on average, a net loss of 497 million euros and net interest income of 1.05 billion euros.
Portugal emerged from a deep recession in the second quarter Of 2013, but banks are still struggling in the short term with the effects of the worst downturn since the 1970s in the bailed-out country.
Shares in Banco Espirito Santo had closed 1.9 percent higher on Thursday before the results were announced, while the broader market in Lisbon advanced 0.6 percent. (Reporting By Axel Bugge)