The bank reported a 13.3 percent drop in net profit for April-June from a year earlier to 1.024 billion euros (£927.43 million) on an adjusted basis, due to higher charges and provisions. However, that was better than an analyst consensus provided by the bank of 975 million euros.

CEO Jean Pierre Mustier confirmed the bank's targets for 2018 and 2019.

"We are halfway through a marathon, I am confident we are making good progress...(after) our best first half since 2008," he told reporters in a post-results conference call.

In the first quarter the bank had reported a 22.6 percent increase in net profit on cost cuts and a fall in loan writedowns.

UniCredit has been restructuring its business since Mustier took over as CEO in mid-2016. It raised 13 billion euros early last year in Italy's biggest cash call to fund a balance sheet clean-up.

The French banker, a former manager at Societe Generale, has sold businesses, cut jobs and shut branches to strengthen the bank's balance sheet.

The bank's CET1 ratio - a sign of financial strength - fell to 12.51 percent by the end of June, from 13.06 percent at the end of March, with 30 basis points shaved off as a result of a BTP bond selloff triggered by political uncertainty after Italy's elections.

But the bank confirmed CET1 would be between 12.3 and 12.6 percent this year and above 12.5 percent at the end of 2019, at current BTP spread levels.

UniCredit said its gross non-performing exposure (NPE) ratio improved to 8.7 percent in the quarter with a coverage ratio of 60.9 percent.

"Our end 2018 (non-core gross NPE) objective is to reach 19 billion euros from 22.2 billion at the end of Q2," Mustier said.

Broker KBW said the results were good, with strong operating trends and better than expected operating earnings.

"Asset quality continues to improve," the broker said in a note.

At 724 GMT UniCredit shares were up 1.8 percent.

(Reporting by Stephen Jewkes, editing by Giulia Segreti and Susan Fenton)