LISBON, April 12 (Reuters) - Portugal's Novo Banco, which the state last month agreed to sell to U.S. fund Lone Star, posted on Wednesday a 2016 net loss of 788 million euros, 15 percent smaller than in 2015 despite heavy provisions as its revenues rose and costs fell.
The bank that was rescued by the state in 2014 from the ashes of Banco Espirito Santo, made 1.37 billion euros in provisions for bad loans, debt, restructuring costs and contingencies, up from 1.06 billion the previous year.
But it slashed operating costs by almost 22 percent to 591 million euros, mainly by laying off staff and closing branches in Portugal and abroad, and its net interest income rose 14 percent to around 515 million euros.
"During 2016, Novo Banco group has resumed functioning normally, maintaining adequate liquidity levels and solvency," the bank said in a statement.
Chief Executive Antonio Ramalho told journalists he did not think a legal injunction against the bank's planned sale posed a threat to the operation going through.
The operating result reached 386.6 million euros, three times higher than a year earlier.
In the third quarter of 2016 Novo Banco posted its first quarterly profit, of 3.7 million euros, since the 4.9-billion-euro state rescue in August 2014.
Reporting By Sergio Gonaclves and Andrei Khalip