(MENAFN- AFP) Italy's largest bank Unicredit defied expectations Tuesday to post a 37.8 percent surge in first-half profit helped by increased demand for loans, in a positive sign for Italy's struggling economy.

Net profit in the first six months of the year was 1.1 billion euros ($1.47 billion), beating analysts' expectations of 1.042 billion euros, the bank said in a statement.

In the second quarter of 2014, profit rose to 403 million euros, up 11.6 percent compared to the same period last year and ahead of predictions for 296 million euros.

"The positive results achieved in this quarter confirm the group's strong performance, despite the uncertain macroeconomic environment," chief executive Federico Ghizzoni was quoted as saying.

"Italy displays increasing profitability and new loan origination increases by over 50 percent versus first half 2013," he said.

The upturn in profits for Italy's largest lender is a glimmer of hope for an economy struggling to pull itself out of the deepest recession since World War II.

Last week Prime Minister Matteo Renzi was forced to admit the eurozone's third-largest economy is likely to miss the government's 0.8 percent growth target this year.

Unicredit crept back into profit in the first quarter after suffering a staggering 14 billion euro loss last year as it wrote down the value of assets and increased its loan loss provisions.