MILAN: Italian bank Intesa Sanpaolo on Friday reported earnings ahead of market expectations as bad loan risks on its books diminished.
Net profit fell 24.2 percent in the first quarter to 806 million euros ($920.4 million), which compares with forecasts by analysts of around 708 million.
Operating profit dropped on the back of falling interest income and earnings from fees and commissions.
But Intesa said it made significant cuts in provisions against risky loans, "reflecting an improving credit trend".
Loan loss provisions fell by a quarter to 694 million euros in the first quarter from the previous three months, taking them to their lowest level since 2011.
Intesa said that a new private fund, Atlante, created to help Italian banks with their bad loans will help it reduce risky loans even further.
Chairman Carlo Messina told analysts in a conference call that the fund would in fact help stabilise the entire Italian banking sector, which has been shaken by serious investor doubt concerning its ability to survive a crippling combined bad loans mountain of an estimated 200 billion euros.
Those concerns have sent Italian banking shares into a tailspin, with the FTSE Italia All-Share bank index losing 38 percent over the past six months.
Intesa Sanpaolo's shares, which dropped around 28 percent over that period, were 1.2 percent higher in late Milan stock exchange trading at 2.25 euros following Friday's results announcement.
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