Unione di Banche Italiane SpA, Italy’s fifth-largest bank, said first-quarter profit dropped as lower income from lending and trading more than offset a decline in provisions for bad loans.

Net income fell to 42.1 million euros ($48 million) from 76 million euros a year earlier, the Bergamo-based bank said in a statement on Thursday. That missed the 46 million-euro average estimate of six analysts surveyed by Bloomberg.

Chief Executive Officer Victor Massiah is cutting costs and seeking to shore up earnings and improve asset quality as lending margins narrow. UBI is considering combining with other cooperative banks after being converted into a joint-stock firm in October last year.

Revenue fell 11 percent from a year earlier to 773 million euros, while provisions for bad loans fell 18 percent to 155 million euros. Operating costs increased to 528 million euros from 521 million euros, affected by a 21 million-euro contribution to the the European single resolution fund for failing banks.

The bank’s transitional common equity Tier 1 ratio, a measure of financial strength, stood at 12.1 percent as of March 31.

UBI reiterated it expects a lower cost of credit for 2016.

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