Italy's No.2 bank UniCredit posted a much higher than expected first-quarter net profit thanks to higher revenues driven by fee and trading income and shrinking loan losses.

UniCredit said net profit in the three months through March totalled 887 million euros ($1.1 billion). That compares with an average estimate of 396 million euros in an analyst consensus provided by the bank.

UniCredit said it expected its 2021 full-year underlying net profit, which strips out one-off items, to be "broadly in line" with its previous guidance of more than 3 billion euros.

It trimmed its revenue outlook saying it would meet consensus estimates, indicated on its website at 17.2 billion euros, compared with a previous 17.7 billion euro estimate.

The bank had posted a 2.7 billion euro loss in the first quarter of 2020 hit by costs borne to lay off people and cut its stake in Turkish lender Yapi Kredi.

UniCredit said new CEO Andrea Orcel expected to conclude the strategic review he started after his arrival in mid-April in the second half of the year and would present it to investors then.

After setting aside 2.2 billion euros last year in anticipation of COVID-driven future losses, UniCredit said loan loss provisions in the quarter were just 167 million euros, helped by a small release of past provisions.

The bank also improved its outlook for expected loan losses in the rest of the year.