MILAN (Reuters) - Italy's Banco BPM beat forecasts on Tuesday with a 40% annual rise in first-quarter net profit, as rising revenues and falling loan-loss provisions more than offset an increase in costs.

Italy's third-largest bank reported a net profit of 370.2 million euros in the January-March period. This compares with a LSEG analyst consensus of 352 million euros.

Income from lending grew by 16.3% year-on-year as deposit costs in Italy continue to lag lending rates, although it was virtually flat quarter-on-quarter.

(Andrea Mandalà, editing Gianluca Semeraro)