MILAN, May 12 (Reuters) - Monte dei Paschi di Siena posted better than expected quarterly earnings on Tuesday, confirming continuing strong momentum for the Italian banking sector.

Closing the reporting season for Italy's main banks, Monte dei Paschi (MPS) said that first-quarter revenue grew by 3% despite internal turmoil since last year's acquisition of rival Mediobanca.

Barclays analysts said the results were driven by MPS while Mediobanca showed continued weakness in wealth management.

However, Mediobanca's private banking business improved in April after the loss of some senior bankers tempted away by rivals in expectation that the poached staff will take their clients with them.

Mediobanca said on Monday that its wealth management division had recorded net outflows of 1.1 billion euros ($1.3 billion) in the quarter.

"We have seen a rapid normalisation in the business, with client confidence returning, the banker base stabilising and commercial activity rebounding," MPS Chief Executive Luigi Lovaglio told analysts.

"Recruitment has restarted ... with initial hires expected to join from the beginning of next quarter."

After presenting strategy for the combined group in February, Lovaglio was pushed out by the board only to regain his job thanks to a shareholder vote in mid-April.

MPS, which has already started selling Mediobanca products and lowered costs by renegotiating some supply contracts, reported first-quarter net profit of 521 million euros. That compared with a 511 million euro analyst consensus provided by the company. 

Revenue totalled 1.96 billion euros, against a forecast of 1.92 billion euros, with Mediobanca's contribution at about 925 million euros. Excluding Mediobanca, revenue was up 3% year on year, buoyed by increases in net fee and lending income.

MPS said lending was boosted by residential mortgages and consumer finance.

Rivals such as UniCredit and Intesa Sanpaolo have reported higher corporate loans. For the sector as a whole, corporate lending grew at its fastest for 41 months in March, Bank of Italy data showed on Tuesday.

($1 = 0.8508 euros)

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(Reporting by Valentina ZaEditing by Louise Heavens and David Goodman)

By Valentina Za