UniCredit Q1 profit down as it provisions for Europe-mandated deposit protection system

Italy's largest bank by assets, UniCredit, says net profit dropped by nearly one-third as it provisioned more funds against risk.

The bank said Tuesday that its net profit for the first three months of the year was 512 million euros ($576 million), down from 712 million euros a year earlier.

UniCredit said the earnings took into account a 91 million euro payment to a Europe-directed fund complementing local deposit protection systems, namely in Germany and Austria. The funds took effect in 2015.

The bank said impaired loans were down 1.4 percent from the previous quarter, to 83.2 billion euros.

CEO Federico Ghizzoni said the results showed some signs of recovery, and cited an improvement in investment quality and capital position.

UniCredit shares were flat in Milan trading at 6.525 euros.