MILAN, May 5 (Reuters) – Intesa Sanpaolo (ISP.MI), Italy’s biggest bank, raised its 2023 profit goal on Friday after first-quarter net income nearly doubled thanks to higher interest rates and shrinking loan loss provisions.

The lender forecast 7 billion euros ($7.7 billion) in net profit this year, having said in February that it would top last year’s result of 5.5 billion euros.

The upgrade comes after fellow heavyweight UniCredit (CRDI.MI) raised its 2023 profit target this week by more than a fifth.

Intesa reported first-quarter net income of 1.96 billion euros, far above a 1.54 billion euro consensus in analyst forecasts compiled by Reuters.

Total revenue topped expectations at 6.06 billion euros, up 7% from the previous quarter. Higher interest rates lifted lending income by 66% year on year, helping to offset a 6.6% drop in net fees and commission.

With its business geared towards asset management, as well as insurance, Intesa is more exposed than rival UniCredit to recent market turmoil affecting investment inflows and performance.

However, it said the boost from higher rates would continue to drive profit higher and forecast more than 13 billion euros in net interest income this year.

The bank confirmed its 70% payout ratio.

Core capital edged up in the quarter to 13.7% of risk-weighted assets from 13.5% at the end of last year.

($1 = 0.9069 euros)

Reporting by Valentina Za, editing by Alvise Armellini

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