MILAN- Italy's biggest bank UniCredit missed third-quarter profit forecasts due to a writedown on its stake in Turkish bank Yapi Kredi and said it would step up cost cuts to offset lower revenues.

A slump in the Turkish lira has hit the value of UniCredit's 41 percent indirect stake in Yapi.

Like other Italian banks, UniCredit also faces trouble at home where the spending plans of Rome's new anti-establishment government have sent sovereign debt costs soaring.

UniCredit said on Thursday net profit came in at 29 million euros ($33 million) in the third quarter after an 846 million euro writedown on Yapi.

Analysts had been looking for a 907 million euro profit based on a consensus provided by the company. Net interest income and fees were in line with expectations.

UniCredit confirmed its 2019 profit goal of 4.7 billion euros but increased proposed cost cuts by 200 million euros to offset lower-than-expected revenues in a more challenging environment.

"We maintain the operating profitability (target)," CEO Jean Pierre Mustier told a press call. "We're being super conservative on the Turkish side and the trading side and we compensate with lower costs."

The bank's core capital ratio fell to 12.11 percent on a fully-loaded basis down from 12.51 at end-June.

UniCredit said it now saw its core capital next year at 12-12.5 percent compared with a previous estimate of more than 12.5 percent.

($1 = 0.8753 euros)

(Reporting by Valentina Za; Editing by Adrian Croft) ((; +39 02 6612 9526;))