Italy's UniCredit wraps up 2018 on a strong note

FILE PHOTO: Unicredit bank logo is seen in the old city centre of Siena, Italy June 29, 2017. REUTERS/Stefano Rellandini

MILAN (Reuters) - Italy’s biggest bank UniCredit ended the year on a high, posting a better-than-expected fourth-quarter net profit, excluding an 887 million euros (£781.2 million) one-off non-cash tax boost.

The bank, which was forced to book an 846 million euro impairment on its stake in Turkish lender Yapi Kredi in the previous quarter, said fourth-quarter profit came in at 1.73 billion euros.

Before the positive tax effect stemming from the adoption of a new accounting principle this year, quarterly profit stood at 840 million euros, well above an average analysts’ forecast of 693 million euros in a consensus provided by the bank.

The Yapi Kredi impairment and provisions related to a dispute with U.S. authorities over alleged sanctions violations in Iran weighed on full-year result, but operating profit rose 13 percent annually in 2018 - the best in a decade.

The bank, which will present a new business plan in London on Dec. 3, stuck to a 2019 net profit target of 4.7 billion euros.

UniCredit, which raised 13 billion euros in capital from investors to fund a balance sheet clean-up back in 2017, said it had further lowered its impaired loan burden in the fourth quarter to 7.7 percent, the best in Italy.

Reporting by Valentina Za, Editing by Sherry Jacob-Phillips