(Recasts, adds CEO quotes on ECB, Polish unit)
By Sergio Goncalves
LISBON, Feb 2 (Reuters) - Portugal's biggest listed bank Millennium bcp posted a larger-than-expected fourth-quarter loss on Monday despite a 39 percent jump in net interest income, after a one-off tax hit and lower share prices.
The bank, which failed European stress tests last year, said in October it was hoping to break even by the end of 2014 after a long period of losses.
But tax adjustments of 83.5 million euros and some 50 million euros knocked off the value of its shareholdings in Portugal Telecom SGPS meant it had a net loss of 120 million euros ($136 million) in the last three months of 2014.
That was down from a loss of 143 million in the same period of 2013, but higher than 111 million expected on average by analysts.
Still, CEO Nuno Amado told reporters that without the one-off factors: "the bank clearly reached break-even in the fourth quarter, which was our objective."
"The evolution of the bank's trend is positive. We are creating conditions to be profitable in Portugal," he said.
Last year, the country exited an international bailout arranged during the 2011 debt crisis with the economy growing for the first time after a three-year recession.
The bank's net interest income, the difference between interest charged on loans and paid on deposits, rose nearly 39 percent to 325 million in the fourth quarter, slightly above the average forecast of 312 million euros.
During 2014, the bank also repaid more than 2 billion euros in costly state loans, which reduced its interest payments.
Amado said the bank was considering whether to turn to the European Central Bank's new bond-buying programme announced last month and sell its government debt holdings. But he said it would definitely use the ECB's previous programme of ultra-cheap TLTRO loans as it was a good way to finance companies.
The bank said it had benefited from a trend of recovering profitability in Portugal and a growing contribution from its operations abroad, mainly its Polish subsidiary Bank Millennium, whose quarterly profit rose 10.5 percent
Asked whether Bank Millennium, or part of it, was up for sale, Amado said it was a core asset, but he left open the possibility of reducing its controlling stake from 65.5 percent to 51 percent.
"It is a matter we will look into later," he said.
Financial sources have said Millennium bcp may sell down the stake to improve its solvency ratios after failing the European bank health checks. BCP has said it has already taken the necessary steps to shore up solvency.
For 2014 as a whole, the bank cut its net loss sharply to 218 million euros from 740 million in 2013, although this was also a bigger loss than expected by analysts.
$1 = 0.8823 euros Reporting by Sergio Goncalves; writing by Andrei Khalip; editing by David Clarke