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UPDATE 1-Lower revenue weighs on Intesa's first-quarter results

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MILAN, May 7 (Reuters) - Italy's largest retail bank Intesa Sanpaolo reported a 16 percent drop in first-quarter net profit, weighed down by lower revenues and despite a marked decline in costs. Net profit totalled 1.05 billion euros ($1.18 billion), higher than an analyst consensus of 900 million euros. Results a year ago, which Intesa said at the time had been the best first quarter since 2008, had benefited from one-off gains.

Operating revenue fell 8.8 percent and net interest income - a measure of how much money a bank makes from its core retail business - was down 5.2 percent from a year earlier.

Net fees and commission income dropped 7 percent while income from the insurance business was flat.

Operating costs decreased by 4.5 percent and core capital remained strong with a common equity tier 1 ratio, a key measure of financial strength, at 13.5 percent at the end of March - one of the highest in Italy.

Intesa shares fell 1.8 percent to 2.25 euros by 1144 GMT, weighed down by news of weaker revenues, traders said. ($1 = 0.8933 euros) (Reporting by Silvia Aloisi, editing by Valentina Za and Louise Heavens)