MILAN Aug 5 UniCredit, Italy's biggest bank by assets, beat analyst expectations with a net profit of 403 million euros ($539.38 million) in the second quarter, thanks to a strong contribution from its central and eastern Europe operations.
The figure compared with a net profit of 361 million euros a year ago and of 332 million euros in an analyst consensus forecast distributed by the bank.
In the first half, net profit totalled 1.1 billion euros, putting the bank on course to reach its full-year target of 2 billion euros. UniCredit said that Poland and its other central and eastern European units had accounted for 40 percent of that figure.
The results were hit by one-off items such as tax payments for around 200 million euros on the revaluation of UniCredit's stake in the Bank of Italy.
Like other European banks, UniCredit has been cutting jobs and shedding assets to reduce costs and bolster its financial strength in preparation for a Europe-wide health check of lenders.
Over the past two months, it has listed a 34.5 percent stake in online bank Fineco and sold an 81 percent holding in web broker DAB. It is also in talks to sell its bad loans management unit UCCMB and could sell up to 50 percent of its asset management firm, Pioneer.
The Common Equity Tier 1 ratio, a measure of financial strength, stood at 10.4 percent at the end of June when including the Fineco and DAB operations, up from 9.5 percent three months earlier.
That figure is above an 8 percent minimum requirement set by the European Central Bank but below the 12.9 percent level reached of domestic rival Intesa Sanpaolo.
UniCredit is the market leader in central and eastern Europe.
The bank has so far shrugged off concerns about the fallout from sanctions from the conflict between Ukraine and Russia and European sanctions against Moscow, and on Tuesday said Russia - which accounts for around 6 percent of total revenues - had put in a "solid perfomance" in the second quarter. ($1 = 0.7472 Euros) (Reporting by Silvia Aloisi and Gianluca Semeraro; Editing by Lisa Jucca)