UPDATE 2-Lebanon's Bank Audi says Q1 net rises 31.6 percent

* Q1 net up 31.6 percent to $80.2 mln

* Results "strong indication" for 2-digit full-year growth

* Assets rise to $26.8 bln, customer deposits at $23.2 bln

(Adds details, quotes on deposits)

By Yara Bayoumy and Mariam Karouny

BEIRUT, April 22 (Reuters) - Net profit at Lebanon's Bank Audi (AUDI.BY) (AUSR.BY) rose 31.6 percent to $80.2 million in the first quarter of 2010, results which its chief financial officer said on Thursday were a strong signal for double-digit growth this year.

The results of Lebanon's largest bank in terms of assets were compared with the same period a year ago, when first-quarter net profit stood at $61 million.

"We are quite happy and comfortable with those results especially because they translate ... (into) an improvement in the risk profile of the bank and in the overall level of efficiency," CFO Freddie Baz told Reuters in an interview.

"This is a solid indication about a strong two-digit growth in our net earning in the current year."

Baz attributed the strong growth to a positive economic environment in the Middle Eastern and north African countries where it operates, particularly Lebanon, Egypt, Syria and Jordan.

Baz said the bank's assets rose to $26.8 billion, which corresponded to an increase of $350 million since the end of December 2009. Customers' deposits grew $237 million in the first quarter of 2010 to $23.2 billion.

FUND TRANSFERS

Baz also said in an interview he was frustrated by the central bank's recent comment it would not allow mergers between the country's top financial institutions.

"Talking on behalf of the bank, I feel frustrated (because) there is no one single Lebanese bank ranking today among the top 10 Arab banks," Baz said, adding there were a lot of synergies to be generated through consolidation in the sector. [ID:nLDE63L2AY]

Lebanon's banking sector is one of the country's main strengths and strict central bank regulations have allowed Lebanese banks to escape the brunt of the financial crisis, prompting expatriates to transfer funds to Lebanon at an above-average rate last year.

Baz said inflows increased by 19 percent in the first quarter of 2010 compared with the same period last year.

Baz expected money deposited from abroad by expatriate Lebanese and Arabs to stay in Lebanon's banks because they get higher premiums than they could get elsewhere.

"Last year for the first time we witnessed deposits coming from non-resident non-Lebanese, mainly Arabs from the GCC (Gulf Cooperation Council)," Baz said. "I expect them to stay."

Growth in Lebanese banking sector deposits is seen as vital in helping the state meet borrowing needs to finance a public debt equivalent to nearly 148 percent of gross domestic product.

The bank's GDRs closed 0.4 percent down at $88.5.

Earlier this month, ratings service Moody's upgraded Bank Audi and some of Lebanon's top banks to B1 from B2 following a sovereign upgrade. (Editing by David Holmes)