* Q4 net loss 83 mln euros vs poll forecast 169 mln loss
* Hungarian unit lost 279 mln euros in quarter
* CEO says Hungary had turned into nightmare for banks
* FY loan-loss provisions 4.7 billion euros, up 11 pct
* Shares end up 0.4 pct (Releads with Hungary losses, CEO comments)
By Silvia Aloisi
MILAN, March 12 Italy's Intesa Sanpaolo said it could cut its presence in Hungary after losses there pushed it into the red in the last quarter, calling the eastern European country a "nightmare" for the banking industry.
Italy's biggest retail lender said its CIB unit, Hungary's fifth-biggest bank, made a net loss of 279 million euros ($363 million) in the fourth quarter of 2012, almost entirely because of higher provisions to cover bad debts.
The deficit was the single most negative factor for Intesa's results in the last three months of the year, in which the Italian lender made a group net loss of 83 million euros.
Intesa's quarterly loss was much smaller than an average forecast of 169 million euros in a Reuters poll of six banks and brokerages.
"Hungary ... used to be very good for financial services, it has now turned into a sort of nightmare," Intesa CEO Enrico Cucchiani told analysts on a conference call.
Hungarian Prime Minister Viktor Orban, who took power in 2010, has taken a number of measures that have angered foreign investors, including introducing Europe's highest bank tax and forcing the effective nationalisation of private pension funds.
On Tuesday, Orban said there were too many foreign-owned lenders in the country.
Cucchiani said Hungary "continues to be a challenging environment, we have plans in place to restructure operations rather aggressively ... We sent a team there and could reduce our presence."
Hungarian households and businesses have suffered for years from ballooning debt service costs on loans denominated in Swiss francs and euros as the forint weakened, eroding domestic consumption and hurting banks' loan books.
Intesa's Hungarian unit, with 119 branches and 8 billion euros of total assets, accounts for just over 1 percent of its overall business.
The bank makes 80 percent of its revenue in Italy and like other domestic rivals is having to set aside more cash to cover rising bad loans, as the euro zone's third-largest economy battles through a painful recession.
Loan-loss provisions totalled 4.7 billion euros in 2012, up 11 percent from a year earlier, but Cucchiani said the bank had made only marginal adjustments after a Bank of Italy audit of loan charges at the country's lenders.
"From these checks ... we came out with a clean bill of health. I would not be surprised if the situation was different for other players," he said.
Full-year net profit came in at 1.6 billion euros against a net loss of 8.2 billion for 2011, when Intesa wrote down billions of euros of goodwill from past deals to repair a balance sheet damaged by the euro zone debt crisis.
The improvement also reflected strong trading gains and cost cuts after the bank shed 5,000 jobs in 2012.
Intesa's shares reversed earlier losses after the results to end 0.4 percent higher at 1.26 euros.
"The results are a bit better than market forecasts and they have triggered purchases because people were expecting worse," a Milan trader said.
Intesa, the first major Italian bank to report full-year earnings, said the cost of credit would remain high in 2013. Its core Tier 1 capital ratio, a key measure of financial strength, stood at 10.3 percent at the end of the year - one of the highest in Italy - after it proposed a dividend of 0.05 euros.
($1 = 0.7684 euros) (Additional reporting by Gianluca Semeraro and Stefano Rebaudo; Editing by David Holmes)