The FINANCIAL -- Unicredit SpA, Italy's largest bank, on March 17 said that its fourth-quarter net profit fell 27% due to a decline in interest income.

The Milan-based lender, which has operations in 22 countries across Europe, said fourth-quarter net profit fell to €371 million ($511.1 million) from a €505 million the year before, but was well above analyst forecasts of €50 million, according to The Wall Street Journal. For the full year 2009 the bank posted a net profit of €1.7 billion compared with €4.01 billion in 2008.

"The fourth quarter 2009 performance provides further confirmation of a few positive elements that emerged during the third quarter, such as: improvement in the balance sheet and capital structure, declining operating costs and increasing net commissions," the bank said. The announcement came as UniCredit also said it will sell its 2.8% stake in Generali, Market Watch informs.

The bank proposed a dividend of 3 cents a share, according to Bloomberg. Chief Executive Officer Alessandro Profumo, who cancelled a cash dividend for 2008 result amid the financial crisis, was asked by investors to resume payments to gain support for a 4 billion-euro capital increase in January. The CEO is shedding non-strategic assets and cutting costs to strengthen the bank’s finances after the global credit crisis hurt the quality of loans and caused an economic slump.

Unicredit increased its loan loss provisions in the fourth quarter to euro2.1 billion, up 56 percent from euro1.3 billion in the same quarter a year earlier. Income from interest was down 22 percent to euro4.1 billion, AP reports. The bank said it had shored up its Core Tier 1 ratio, a key sign of a bank's health, to 7.62 percent thanks to a capital increase completed in February.

UniCredit shares were hammered by several waves of selling from mid-2008 till the first quarter of 2009 on investor concerns about its exposure to Central and Eastern European economies, especially in Ukraine and Kazakhstan, According to The Wall Street Journal. Executives at the bank said that plans to cope with the ongoing global crisis were put in place to avoid heavy losses.

UniCredit is planning to file a request to get a banking license in Libya at the end of the month, people with knowledge of the situation said last week, the same source reports. The Libyan investment authority has a stake of around 5% in UniCredit.

Related Stories