UPDATE 1-Bangkok Bank Q1 profit down, poor year in prospect

* Q1 net profit down 13.5 pct to 4.87 baht

* Outlook is weak, hit by economic woes, political unrest

* Smaller banks also post weaker quarterly profits (Adds analyst comment, other banks' results)

BANGKOK, April 20 (Reuters) - Thailand's biggest lender, Bangkok Bank PCL BBL.BK, posted a 13.5 percent fall in first-quarter net profit on Monday, below expectations, due to a fall in lending and net interest margins plus higher provisions.

The results suggest a dismal year for the market leader and other Thai banks, with global economic weakness continuing to hit loan demand while lower interest rates hurt income.

On top of that, worries about political unrest after renewed violence in Bangkok last week are depressing investment confidence and consumption, and some economists expect the economy to shrink 5 percent in 2009.

The lender, 47 percent owned by foreign institutional investors, said late last year that 2009 loans would grow 4-5 percent, but analysts are now betting on 2-4 percent. The bank's lending rose 13 percent in 2008.

Bangkok Bank -- a benchmark for domestic industry -- said its January-March net profit fell to 4.87 billion baht, down from 5.63 billion baht a year earlier, missing an average forecast of 5.30 billion baht by seven analysts surveyed by Reuters.

"Due to bigger provisions and lower net interest margins than expected, the result was below the market consensus," said Worawat Saisuphatphol, a banking analyst with KGI Securities.

Ahead of the results, full-year net profit was forecast to drop 12 percent to 17.75 billion baht, according to 16 analysts polled by Reuters Estimates.

The bank said in a statement it had set aside provisions of 1.96 billion baht, against an average forecast from analysts of 1.8 billion baht.

Quarterly profits were hit by a 3.6 percent drop in outstanding loans in the three months to 1.13 trillion baht. Net interest margins were about 3.05 percent in January-March, down from 3.35 percent a year earlier as a result of lending rate cuts.

The bank, which has assets of 1.7 trillion baht, said gross non-performing loans rose slightly to 4.75 percent of loans by the end of March from 4.62 percent at the end of 2008.

Earlier, smaller rivals also reported a fall in net profits in the first quarter, with state-run Krung Thai Bank PCL KTB.BK posting a bigger-than-expected 39 percent drop, dragged down by an absence of investment gains and weaker net margins. [nBAK000735]

Squeezed margins and shrinking loan growth also hit first-quarter earnings at number three Siam Commercial Bank SCB.BK, down 18 percent, while fourth-ranked Kasikornbank's KBAN.BK net profit dropped 14 percent.

For more details on Siam Commercial Bank, click on [nBAK000732], and on [nBAK000730] for Kasikornbank.

Bangkok Bank has a market value of about $4.17 billion. Its stock closed up 1.3 percent at 79.75 baht before the results came out on Monday, when the main Thai index .SETI rose 2.08 percent.

Its shares have risen 15.6 percent since the start of the year, outperforming a 3.63 percent rise in the main SET index .SETI. They tumbled 41.5 percent in 2008. ($1=35.52 BAHT) (Reporting by Arada Therdthammakun; Editing by Muralikumar Anantharaman and Alan Raybould)