May 15 (Bloomberg) -- Banca Monte dei Paschi di Siena SpA, Italy’s third-biggest bank by assets, said profit almost doubled in the first quarter because of capital gains from asset sales.

Net income rose to 334 million euros ($455 million) from 171.7 million euros a year earlier. The median estimate of nine analysts surveyed by Bloomberg forecast net income of 100 million euros, excluding extraordinary gains. Monte Paschi adjusted its net income figure to reflect last year’s takeover of Banca Antonveneta SpA, the lender said today in a stock- exchange statement.

General Manager Antonio Vigni during a conference call today maintained the company’s target to cut costs 3 percent this year with net interest income growth “between zero and minus 5 percent by the end of the year.”

Siena, Italy-based Monte Paschi in March requested 1.9 billion euros in government aid to boost capital to offset the global financial crisis and the burden of its 9 billion-euro acquisition of Antonveneta. The bank will sell bonds to the government as part of the plan.

“With government hybrids injected into its capital structure, Monte Paschi can face the crisis,” Deutsche Bank AG said in an April 29 note. “The focus will increasingly be on earnings generation needed to redeem borrowed capital.”

Asset Disposals

Gains from fixed asset sales, including a 67 percent stake in the bank’s asset management division which was sold to private equity group Clessidra SpA, totaled 194 million euros. Provisions and writedowns increased 33 percent as credit quality deteriorated, while total revenue fell 4.7 percent.

“Monte Paschi is still in talks to sell 150 branches,” Chief Financial Officer Marco Morelli said on the conference call, adding that asset disposals will be completed only at a “satisfactory price.” Monte Paschi must sell the branches by the end of 2009 to comply with an antitrust ruling after the Antonveneta acquisition.

“The market is likely to remain skeptical about the successful sale of the branches and of real estate assets,” Mediobanca analysts, whose have a “underperform” rating on the stock, wrote in a report published today.

Selling assets, including real estate and branches, will allow Monte Paschi to reimburse the government bonds by 2013, Chief Executive Officer Giuseppe Mussari said March 27.

Monte Paschi rose as much as 3.2 percent, and was up 1.3 percent at 1.28 euros at 10:55 a.m. in Milan, giving the company a market value of 8.5 billion euros. The Bloomberg Banks and Financial Services Index has risen 4.6 percent in the past six months, compared with Monte Paschi’s 8.6 percent decline.

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net

Last Updated: May 15, 2009 04:57 EDT